PRODUCT SALES DETERMINANTS

Product sales, generally speaking, depend upon the market need, price of the product, demand-supply situation, purchasing power available with the customers and their willingness to spend that on the purchase of the product. The importance of these factors varies according to the type of product sold i.e., consumer non-durable goods, consumer durable goods, and industrial goods. Let us now identify the major determinants of product sales relating to different types of goods.

Consumer Non-durable Goods

Three_, basic factors determine the sales of relatively low priced, short shelf life and frequently purchased consumer goods. These are: disposable personal income (personal income minus direct taxes and other deductions) of the customer; demographic characteristics (age, sex, occupation, urban/rural location, etc.) of the population, and the price level including competitive structure of the market.

The growth in the disposable income level as well as per capita availability of products provide continuity in the sales of food products, textiles, household articles and similar products.

Price of a product relative to the disposable income of the customer influences the customer choice criteria regarding purchase of complimentaries as well as substitutes. It also affects the quality level (high, average, low) of the products purchased.

Changes in demographic characteristics of the population such as its size, literacy, number of children in a family, etc. help in the selection of preferred market segments and their cultivation with the appropriate marketing mix.

Consumer Durable Goods

These goods have a durable (long) life and are generally bought out of savings. Their purchase frequency is thus limited to once or twice in the life of a household. The purchase of such products is influenced by:

a)   Discretionary Income (disposable income minus essential expenditures on basic necessities and other fixed obligations like debt payments, insurance premiums, etc.) level of the population.

b)   Availability of infrastructural and support facilities for the product usage in the country such as pucca roads for the usage of scooters and other vehicles; broadcasting stations and transmission centres in the case of radios, transistors and television; and electricity n the case of various electrical appliances including refrigerators and air-conditioners. Availability of repair, spares and maintenance facilities in proximity to the households location help increase the sale of consumer durable further.

c)   Price, credit or hire-purchase facilities available, and

d)   Life-style of the households and the role of ego, status and prestige in it.  

The improvements recorded in the levels of discretionary income, extension in infrastructural and support facilities, easy availability of consumer loans and hire-purchase/ instalment schemes as well as changes in urban life-style has opened up the Indian consumer durable market in a big way. The rising sales of transistors, two-in-ones, televisions, scooters and motor-cycles, mixers and cookers, foam mattresses and furniture items, etc. are just a few indications of the same.  

Industrial Goods

These goods help in the production of other goods which are closer to consumer usage. Their demand, therefore, is linked with the off-take by the ultimate users and so is, popularly called ‘derived’ demand. In other words, industrial goods are mainly basic or mother goods, such as machine tools, power equipment, steel, industrial machinery, components, control instruments, lubricants, etc. And, to repeat, the sales of industrial goods is linked with the demand in the user industries e.g., demand of mobile making machinery and components in India is determined by the sale and demand of mobiles in India.

Industrial goods forming part of the industrial infrastructure are greatly influenced by the Government of India's industrial and technology policy, budgetary outlays, developmental plans and the availability of industrial finance through national and international sources. Any policy or allocation change, therefore, affects the working of Industrial goods, firms and often makes them face either a recession or a recovery position in the market.

In short, an industrial products sales forecast is influenced by (a) company forecast, (b) industry forecast, (c) national economic forecast, and (d) world economic forecast.