Jul 20, 2017

CLASSIFICATION OF INDUSTRIAL GOODS




Industrial goods may be divided as, fabricating materials and past, equipments, operating supplies and raw materials. The first three are manufactured industrial goods while the last one refers to natural and agricultural goods.

FABRICATING MATERIALS AND PARTS:
They are the industrial goods which have undergone some processes but which require further processing or which require to be combined with other materials or other parts to become consumer goods. Fabricating materials are further processed and they lose their identity to become part of the finished product while the fabricating parts have gone through complete processes and are directly used in the finished products for the ultimate consumer. For e.g., pig iron which becomes steel, yarn which becomes cloth, metal sheets, bars, etc are all fabricating materials while tires, tubes, batteries bearings, spark plugs, electric motors etc are fabricating parts.
CHARACTERISTICS:

They are uniform in size and standardized in quality.

Purchases are made on the basis of size and quality.

Supply of these goods must adequate and regular.

Buyers knew what exactly they want in respect of these goods.

MARKETING FEATURES:

They are purchased rationally on large.

Contracts for the purchase of these goods are made sufficiently in advance.

Sales are made directly to their users.

Branding is not important.

Decisions to buy are made by considering not only the prices but also after sales service.

Middlemen may enter when the buyers want to purchase a small scale and at a quick delivery.

EQUIPMENT

Equipment consists of both mechanical installations such as boilers, heavy machines, blast furnaces etc and accessory equipment such as transportation vehicles accounting machines and office instruments, computers etc.

CHARACTERISTICS OF INSTALLATIONS:

As stated above installations include, boilers, turbines, engines, cranes, lathes, locomotives, grinding machines, looms, generators, heavy machineries etc

They have the following charactestics:

They are very costly but long durable.

It’s not possible to test their suitability accurately.

They are likely to become obsolete or out of date due to the invention of new ones.

They are highly technical.

MARKETING FEATURES

Highly technical experts are required to effect sales.

The marketing of installations requires a great deal of selling efforts.

Service before and after sales is very important and it influences the sales

The price of the installation is very high.

The installation is made to certain specifications. Therefore, much time is spent in buying it.

Sellers usually sell them directly to the industrial users. Middlemen are used when the sales quantity are small and are made to several buyers scattered over a wide area.

ACCESSORY-EQUIPMENT

Accessories facilitate the manufacturing processes. They do not influence either the scale of production not do they become part of the finished products. They are less durable than installations. They include accounting machines, franking machines, calculating machines, office furniture, computers and other related consumables small tools etc.

CHARCTERSTICS

They are mostly standardized and branded goods.

Their prices are relatively less than those of installations.

They require extensive sales efforts since the market for them is wide.

They are purchased frequently.

Goodwill of the sellers plays an important role in their sales.

The buyers require assistance from the sellers in making selection of suitable type.

MARKETING FEATURES

They are sold through the manufacturer’s agent or other independent distributors.

Prompt and timely delivery is important.

Direct sale is possible where the order is sufficiently large or where the product is costly.

Sales promotional activities are very effective because the accessories usually standardized and branded.

OPERATING SUPPLIES

They are the material which are used in the operation of the plant or business which do not enter into the finished products. Their life is very short. Fuel, lubricating oil, and other office consumables and necessary tools and accessories with operating supplies etc comes under this category.

CHARACETERISTICS

They do not enter into finished products but they facilitate the operations of the business or the manufacturing processes.

They are short lived.

They are generally low priced.

They are purchased without efforts.

They are purchased frequently but in small quantities.

MARKETING FEATURES

Marketing features differs from products to products. Purchases are made mostly directly on the basis of uniformity, quality, low prices and adequate supply.

Since they are required by a large number of industrial users, the market for them is wide. Therefore, they are generally marketed through the middlemen.

There is keen competition in the marketing of goods because there are competitive products which are standardized and branded. Therefore, price competition plays an important part in the marketing of these goods.

Purchases of these goods are usually made on contract basis.

RAW MATERIALS

Raw materials are industrial goods which have not undergone manufacturing processes. They are to be processed before they become ready for use. They enter into the final products. They may be natural raw materials such as minerals forests products and products of the seas or agricultural raw materials such as jute, cotton, tobacco, fruits etc.

CHARACTERISTICS OF NATURAL RAW MATERIALS

They are limited in their supply.

Their production is specialized and concentrated.

The production is carried out throughout the year.

It is possible to control the production.

They are bulky bur perishable.

They differ in quality and uniformity.

MARKETING FEATURES

Marketing problems: the marketing of natural raw materials is faced with certain problems like:

It becomes necessary to shorten the channel of distribution. May times the producer sells directly to the industrial users.

Cost of transportation them from the centers of production to the places where they are required for use becomes costly because of the bulky nature of these goods.

Natural raw materials are bulky but their price is low. Therefore, cost of transportation is large when compared to the price of these goods. Therefore, transportation cost determines whether these materials should be transported in their natural form or they should be processed nearly before such transportations.

Since the quality and uniformity of these raw materials differ, standardization and grading becomes quite essential so as to enable the manufacturer to get the materials of required quality by referring to the standards and grades. Standardization and grading will benefit both the seller and the manufacturer. The seller gets better price for the standardized and graded goods while the manufacturer ids assured of the required quality of the raw materials for his finished products.

Finally, adequate and regular supply will have to be made to the industrial users. Because of the limited supply, the manufacturers prefer to get these goods in adequate quantities and regularly so that their production is interrupted due to shortage in the supply of these goods. If production is interrupted due to non supply of these goods the manufacturer will be put to a great loss. In order to avoid this manufacturer may adopt the following measures:

He may enter into long term contracts with the suppliers of natural raw materials.

He may purchase when the supply is more in the market and keep a large stock.

He may establish a control over the supplier by affecting vertical integration. In this case, the manufacturer takes the ownership of the supplying concern, so that the entire production of the supplying concern will be at his disposal.











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