ANALYSIS OF MARKETING CHANNELS MARKETING CHARGES AND MARGINS IN CASE OF BAKERY PRODUCTS

Transcription

1 ANALYSIS OF MARKETING CHANNELS MARKETING CHARGES AND MARGINS IN CASE OF BAKERY PRODUCTS MARKETING CHANNELS IN BAKERY INDUSTRY Main work of a baker can broadly be divided into two parts (i) Production and (ii) Distribution. Every baker tries to produce the high quality products at minimum possible cost. This is only a half success of a baker. The success is complete when he makes these products available to the consumers at right time and at right place. It is not enough to produce the products of best quality at minimum cost but it is more important that these products must be made available to the consumers at reasonable price too. The ultimate object of every baker is to earn maximum profit through maximum sales and this object can be achieved only when the consumers are satisfied. The consumers can be satisfied only if the products are provided to them conveniently. The products may be provided to the consumers through different ways. The ways through which the products are provided to the consumers are called marketing channels. In other words the marketing channels are those links which connect the baker with the consumers. In practice we generally find the following channels for the marketing of bakery product in Meerut region- Baker Agent Wholesaler Retailer Consumer Baker Wholesaler Retailer Consumer Baker Wholesaler Consumer Baker Retailer Consumer Baker Consumer Of the above listed channels, the use of first channel is not very common. Bakers usually prefer to sell their products through

2 distributors/wholesaler in different parts of the Region. Distributors/wholesalers buy products directly from bakers and sell them to the retailers. Then these products are sold to the consumers. Apart from the above system sometimes the retailer buy the products from the baker directly and sell them to the consumers. Thus the wholesalers are eliminated from the chain of distribution channel. In some cases these products move directly from bakers to ultimate consumers. Thus it is clear that the first, third and fifth channels are not generally in practice but second and fourth channels are used most commonly in the area selected for the study. The nature and number of marketing intermediaries depend on various factors such as type of products, price of products, demand of products, location and area of the market, government policies etc. The different marketing channels, which are active in the bakery industry of Meerut Region can be studied under the following heads- Bakers Generally the bakers are not considered as a part of marketing intermediaries but in Meerut Region, most of the bakers have their own shops and sell their products at both wholesale and retail level. They play their role not only as producers but also carry on the activities of wholesalers and retailers at the same time. Thus they earn their margin of profit by furnishing their manifold activities, as a trader too. By making direct purchase of products from the bakers also the consumers feel more satisfied as they think that they are paying reasonable price for the products which they are buying as no other marketing intermediary is there to earn his profit in between. Thus the bakers in Meerut Region have their hold in the field of marketing of their products at local level. In the case of bakery industry normally the retailers, from the different part of the region and state make their 87

3 direct contact with the bakers to avoid the services of wholesalers or commission agents who are working in between. Sometimes the bakers also arrange their focus to establish their personal contact with the big retailers or wholesalers working in different parts of the region. It is very common that these bakers involve themselves in trading activities through their paid agents who make their regular visits in the different markets of the said region to establish their relationship with the wholesalers and retailers of their bakery products. Wholesalers/Distributors Wholesaler is the person who generally purchases the bakery products direct from the bakers and sometimes also through the commission agents. At the region level marketing of bakery products, wholesalers play their important role. They deal in different types of products of different bakers and fulfill the requirements of the retailers working in their areas. They establish the link between the bakers and retailers and render their inevitable services to both of them. They make purchases of bakery items in large quantity for the purpose of reselling it to the retailers. Thus this channel of marketing helps the bakers by purchasing their bakery items in large quantity and makes them aware of the future demand of their items. Not only this, it also helps the retailers by providing them the bakery items in small quantities according to their requirements and by allowing them credit facilities. Thus this channel plays an important role in the marketing of finished bakery items. Commission Agents Commission agents are the bodies that work for bakers and wholesalers and provide their inevitable services to them by bridging the gap between them. They charge their commission from the bakers at predetermined rates on the quantity sold of their products. Generally 88

4 these commission agents work as a separate marketing agency and work for more than one baker at a time. They sell the different items of different bakers in the local level markets. Generally these commission agents are not involved only in selling bakery items to wholesalers or retailers, but also have their contact with different confectionaries and other local sellers from where they get the orders for the products produced by different bakers. In some cases a commission agent deals only a single bakery item produced by different bakers but it happens in case when there is a wide scope of that particular bakery item. Retailers Retailers are the important link of distribution channel. They purchase the different bakery items from the wholesalers and bakers for the purpose of reselling it in small quantities to ultimate consumers. They remain in close contact with buyers of bakery items and are fully aware of their current requirements. They play an active role in the marketing of bakery items, as they serve not only the final consumers of the products but also help the wholesalers and bakers by providing them the information about liking of customers and the estimated demand of their products in the market. In case of local level marketing of bakery products in Meerut Region, retailers play their important role by catering the requirements of lakhs of people who are living away from their homes or depend mainly on the readymade food for their meal. In the bakery industry of Meerut Region following models of marketing channels were observed during the survey- 89

5 MARKETING CHANNELS OF BAKERY INDUSTRY IN MEERUT REGION (i) Bakers Wholesalers Commission Agents Retailers Consumers This model of marketing channels is popular in regional and state level marketing of bakery products. So far as the marketing of bakery items at local level is concerned this model is not very common. (ii) Bakers Wholesalers Retailers Consumers 90

6 In this model bakers make direct supply of its products to the wholesalers who sell them to retailers in small quantities. In the end retailers sell these products to the ultimate consumers. This model of marketing channel is found popular in regional level marketing of bakery products. (iii) Bakers Wholesalers Consumers In this model of marketing bakers supply their products to the wholesalers and wholesalers sell them to final consumers. This model of marketing of bakery products does not play any significant role in local and regional levels of marketing. (iv) Bakers Retailers Consumers This model of marketing of bakery products plays an important role in regional level marketing. It is a very popular marketing channel in the bakery industry of Meerut Region. (v) Bakers Consumers 91

7 This model is very less popular for the marketing of bakery products in Meerut Region because it is not possible for a baker to sell his products direct to a large number of consumers who are scattered throughout the country. ANALYSIS OF MARKETING CHARGES AND MARGINS IN CASE OF BAKERY PRODUCTS In the present era of globalization, the market of a product has become so wide that a commodity reaches in the hands of ultimate users passing through different marketing channels. These marketing channels make the product available at the right place and at the right time, thereby not only maximizing the company s chances to sell the product in huge quantity, but also to help the buyers to get their desired products at their nearest place. Although the importance of marketing channels cannot be less estimated in the present business scenario but it is a bare fact that each and every marketing channel, used for physical distribution of a product, has its own cost, which affects the final cost of a product significantly. Hence at the time of selection of physical distribution network of a product, it becomes vital that the number of marketing intermediaries must be limited up to the level of their exact need. In the case of bakery industry, when a baker has a desire to enter in the competitive global market, he must concentrate over the marketing charges at different levels of marketing of bakery products, so that he may check the unnecessary expenses of marketing and may reduce the price of his products up to the competitive level. So it becomes inevitable for a baker to go through all the marketing charges so that it may clearly be judged whether these charges are justified or not. 92

8 Due to technological improvements and automation, undoubtedly the cost of production has been decreased to some extent but the total cost has not lowered on account of rise in marketing i.e. selling and distribution charges. Ordinarily the administration cost does not exceed 10 percent of the total cost of product while selling and distribution charges forms about 25 percent to 30 percent of selling price. Proper accounting of selling and distribution charges (also known as marketing charges) is, therefore absolutely essential. A brief study of selling and distribution charges has been made under the following heads- 1. Selling Expenses Selling expenses are incurred for selling the bakery products to existing and interested consumers. These are grouped together under the head Selling Cost or Selling Overheads. Selling overheads may be further subdivided as follows- (i) Direct Selling Cost The cost incurred on sales-executives, sales- staff and salesoffice may be grouped under this head. Their functions include:- a) Soliciting and obtaining orders, b) Market investigation to ascertain size, nature and extent of market and c) Issuing goods to consumers. Some examples of direct selling cost are as follows: Remuneration (Salaries, commission, bonus, traveling expenses etc.) of salesmen, sales agents and other executives connected with sales. Office expenses i.e. telephone, stationary, rates and rent. Expenses on sales-showroom etc. Remuneration of installation staff. 93

9 (ii) Advertisement and sales Promotion: The main item of expenditure under this head is advertisement. Examples of advertisement and sales promotion are- Sales promotion through displays, posters etc. Distribution of samples, free gifts etc. (iii) Credit Collection: In this category, bad debts and expenses on debt collection may be included for example: Expenses of debt collection office. Legal cost for cost realization etc. (iv) Financial and General Administration: Following are the examples of financial and general administration expenses: Royalty on sales. Discounts and allowances. Administration cost pro rated to selling function. Sales invoicing. Accounts. DISTRIBUTION COST During the time gap between the completion of production of bakery items and placing them in the hands of the customers certain expenses like storage and transportation costs are incurred. These overhead expenses are known as distribution cost. Distribution cost may be grouped under the following heads: (i) Transportation: It includes expenditure on different modes of transport and comprises salaries of vehicle running and maintenance staff, depreciation and insurance of vehicle etc. 94

10 Demurrage, wharfage, tools etc. Expenditure on return of goods. (ii) Warehouse and Storage Costs: The following expenses may be grouped under this head: Secondary packing and storage. Cost of storage of ready goods such as warehouse rent, salaries of warehouse staff, warehouse office expenses, internal transport and depreciation. Loss of finished stock in warehouse etc. (iii) Financial and general Administration: Distribution expenses which are grouped under this head are: Cost of carrying stock investment. Buying of supplies for distribution department. Administration overhead apportioned to distribution. Financial accounts and cost accounting of distribution. A number of marketing intermediaries are used for the physical distribution of finished bakery products at different places. Though each marketing intermediaries has its importance yet it increases the cost of product. Thus in the reference of this study it becomes necessary to gauge the various charges at different levels of marketing so that the factual position may be found out and if there is any imbalance in the system for the smooth running of all the marketing activities necessary measures may be suggested to remove the problems. 95

11 MARKETING CHARGES AND MARGINS IN CASE OF BAKERY PRODUCTS The analysis of Marketing Charges and Margins of selected bakery products has been made intensively as given below: I. MARKETING CHARGES AND MARGINS IN CASE OF BREAD The tables from to give the clear picture of the marketing charges and margins at different levels of marketing of Bread: Table No THE BAKER S MARKETING CHARGES AND MARGINS IN CASE OF BREAD DURING THE YEAR Head Rs. Rs. Rs. % of S.P. 1. Selling Price Less: 2. Manufacturing Cost Marketing Charges: *Commission to Distributor *Delivery Van *Wrapping Expenses *Staff Salary *Advertisement *Wastage Total Marketing Charges Total (2+3) Profit/Marketing Margin (1-4) Source: Personal Survey. 96

12 Table No THE DISTRIBUTOR S MARKETING CHARGES AND MARGINS IN CASE OF BREAD Head Rs. Rs. Rs. % of S.P. 1. Selling Price Less: 2. Purchasing Cost Marketing Charges: *Commission to Retailers *Delivery Van * Warehouse/Shop Expenses *Staff Salary * Wastage Total Marketing Charges Total (2+3) Profit/Marketing Margin (1-4) Source: Personal Survey. Table No THE RETAILER S MARKETING CHARGES AND MARGINS IN CASE OF BREAD Head Rs. Rs. Rs. % of S.P. 1. Selling Price Less: 2. Purchasing Cost Marketing Charges: * Preservation Cost *Staff Salary * Wastage Total Marketing Charges Total (2+3) Profit/Marketing Margin (1-4) Source: Personal Survey. 97

13 Table No CONSOLIDATED TABLE SHOWING MARKETING CHARGES AND MARGINS AT DIFFERENT LEVELS IN CASE OF BREAD Manuf./ Marketing Selling Level Profit/Margin Purch. Cost Charges Price Baker Distributor Retailer Total Source: Chap.IV & Table No to From the analysis of table no it is revealed that the Baker has to incur Rs per kg of Bread as marketing charges which include Rs (22.41% of S.P.) as commission to distributors, 50 paisa (1.72% of S.P.) as delivery van expenses, 55 paisa (1.90% of S.P.) as wrapping expenses, 80 paisa (2.76% of S.P.) as staff salary, 30 paisa (1.03% of S.P.) as advertisement expenses and 15 paisa (.52% of S.P.) as the wastage. His manufacturing cost comes to Rs (68.11% of S.P.) per kg of this product. Thus the total cost computes to Rs (98.45% of S.P.) per kg of bread. At this level the selling price of this product is Rs per kg. Thus the profit or margin remains 45 paisa (1.55% of S.P.) per kg. The marketing charges and margins seem quite reasonable at this level because this product is manufactured and sold at large quantity and give the satisfactory return to the Bakers. The table no reveals that the distributor has to spend Rs (15.50% of S.P.) per kg of this product as marketing charges. In 98

14 these charges commission to retailers constitutes to Rs (12.68% of S.P.), expenses of delivery van remain to 30 paisa (.85% of S.P.), warehouse/shop expenses 25 paisa (.70% of S.P.), staff salary 35 paisa (.99% of S.P.) and wastage 10 paisa (.28% of S.P.). His purchasing price is Rs (81.68% of S.P.) per kg of this product. Thus the total cost constitutes to Rs (97.18% of S.P.). The selling price of this product is Rs per kg at this level. Thus per kg marketing margin computes to Re. 1 (2.82% of S.P.). At this level the marketing charges and margins seem to be quite reasonable as the distributor sells this product in a huge quantity and earns the satisfactory profit as a whole. From the analysis of table no it is noted that the retailer incurs only Re (2.50% of S.P.) per kg as the marketing charges which include the preservation cost 35 paisa (.88% of S.P.), staff salary 55 paisa (1.37% of S.P.) and wastage 10 paisa (.25% of S.P.). His purchasing cost is Rs (88.75% of S.P.) per kg of Bread. Thus the total cost comes to Rs (91.25% of S.P.). The selling price of this product is Rs per kg at this level. Thus the marketing margin of this product computes to Rs (8.75% of S.P.) at retailer s level. At this level the marketing charges and margins seem to be quite reasonable as a retailer can not survive below this margin level as his sale of this product remains in very small quantity. Table no clears the position of marketing charges and margins in a consolidated form very well. It clears that the Baker sells the Bread at a price of Rs per kg and his manufacturing cost and marketing charges are Rs and Rs per kg respectively. Thus 99

15 his total cost per kg computes to Rs and profit margin 45 paisa per kg. At distributor s level the selling price remains to Rs per kg and his purchase price and marketing charges come to Rs and Rs per kg respectively. Thus his total cost computes to Rs and marketing margins to Re per kg. At retailer s level the selling price of Bread remains to Rs per kg and his purchase price and marketing charges come to Rs and Re per kg respectively. Thus the total cost of this product computes to Rs per kg and marketing margins to Rs per kg. It is also noted that in case of Bread total marketing charges are Rs and marketing margins Rs per kg. Thus the total marketing cost computes to Rs per kg of Bread. In case of this product the marketing charges and margins seem to be quite reasonable because no manufacturer or trader can exist in the market below this margin level. II MARKETING CHARGES AND MARGINS IN CASE OF BISCUITS The tables from to give the clear picture of the marketing charges and margins at different levels of marketing of Biscuits: 100

16 Table No THE BAKER S MARKETING CHARGES AND MARGINS IN CASE OF BISCUITS DURING THE YEAR Head Rs. Rs. Rs. % of S.P. 1. Selling Price Less: 2. Manufacturing Cost Marketing Charges: *Commission to Distributor *Delivery Van *Wrapping Expenses *Staff Salary *Advertisement *Wastage Total Marketing Charges Total (2+3) Profit/Marketing Margin (1-4) Source: Personal Survey. Table No THE DISTRIBUTOR S MARKETING CHARGES AND MARGINS IN CASE OF BISCUITS DURING THE YEAR Head Rs. Rs. Rs. % of S.P. 1. Selling Price Less: 2. Purchasing Cost Marketing Charges: *Commission to Retailers *Delivery Van * Warehouse/Shop Expenses *Staff Salary * Wastage Total Marketing Charges Total (2+3) Profit/Marketing Margin (1-4) Source: Personal Survey. 101

17 Table No THE RETAILER S MARKETING CHARGES AND MARGINS IN CASE OF BISCUITS Head Rs. Rs. Rs. % of S.P. 1. Selling Price Less: 2. Purchasing Cost Marketing Charges: * Preservation Cost *Staff Salary * Wastage Total Marketing Charges Total (2+3) Profit/Marketing Margin (1-4) Source: Personal Survey. Table No CONSOLIDATED TABLE SHOWING MARKETING CHARGES AND MARGINS AT DIFFERENT LEVELS IN CASE OF BISCUITS Manuf./ Marketing Selling Level Profit/Margin Purch. Cost Charges Price Baker Distributor Retailer Total Source: Chap. IV & Table No to From the analysis of table no it is revealed that the Baker has to incur Rs (28.13% of S.P.) per kg of Biscuits as marketing charges which include Rs (18.75% of S.P.) as commission to distributors, Rs (1.88% of S.P.) as delivery van expenses, Rs. 102

18 2.50 (3.13% of S.P.) as wrapping expenses,.95 paisa (1.19% of S.P.) as staff salary, Rs (2.43% of S.P.) as advertisement expenses and.60 paisa (.75% of S.P.) as the wastage. His manufacturing cost comes to Rs (69.37% of S.P.) per kg of this product. Thus the total cost computes to Rs (97.50% of S.P.) per kg of Biscuits. At this level the selling price of this product is Rs per kg. Thus the profit or margin remains Rs (2.50% of S.P.) per kg. The marketing margins seem to be quite reasonable at this level because this product is manufactured and sold at large quantity and give the satisfactory return to the Bakers. But the delivery van expenses, warehouse expenses and advertisement expenses are high which should be reduced to a reasonable level. The table no reveals that the distributor has to spend Rs (13.47% of S.P.) per kg of this product as marketing charges. In these charges commission to retailers constitutes to Rs (10.52% of S.P.), expenses of delivery van remain to 95 paisa (1.00% of S.P.), warehouse/shop expenses 75 paisa (.79 % of S.P.), staff salary 80 paisa (.84% of S.P.) and wastage 30 paisa (.32% of S.P.). His purchasing price is Rs (84.21% of S.P.) per kg of this product. Thus the total cost constitutes to Rs (97.68% of S.P.). The selling price of this product is Rs per kg at this level. Thus per kg marketing margin computes to Rs (2.32% of S.P.). At this level the marketing charges and margins seem to be quite reasonable as the distributor sells this product in a huge quantity and earns the satisfactory profit as a whole. 103

19 From the analysis of table no it is noted that the retailer incurs only Rs 2.00 (1.90% of S.P.) per kg as the marketing charges which include the preservation cost 95 paisa (.90% of S.P.), staff salary 55 paisa (.52% of S.P.) and wastage 50 paisa (.48% of S.P.). His purchasing cost is Rs (90.48% of S.P.) per kg of Biscuits. Thus the total cost comes to Rs (92.38% of S.P.). The selling price of this product is Rs per kg at this level. Thus the marketing margin of this product computes to Rs (7.62% of S.P.) at retailer s level. At this level the marketing charges and margins seem to be quite reasonable as a retailer can not survive below this margin level as his sale of this product remains in very small quantity. Table no clears the position of marketing charges and margins in a consolidated form very well. It clears that the Baker sells Biscuits at a price of Rs per kg and his manufacturing cost and marketing charges are Rs and Rs per kg respectively. Thus his total cost per kg computes to Rs and profit margin Rs per kg. At distributor s level the selling price remains to Rs per kg and his purchase price and marketing charges come to Rs and Rs per kg respectively. Thus his total cost computes to Rs and marketing margins to Rs per kg. At retailer s level the selling price of this product remains to Rs per kg and his purchase price and marketing charges come to Rs and Rs per kg respectively. Thus the total cost of this product computes to Rs per kg and marketing margins to Rs per kg. 104

20 It is also noted that in case of Biscuits total marketing charges are Rs and marketing margins Rs per kg. Thus the total marketing cost computes to Rs per kg of Biscuits. In case of this product the marketing charges and margins seem to be quite reasonable because no manufacturer or trader can exist in the market below this margin level. III MARKETING CHARGES AND MARGINS IN CASE OF CAKES The tables from to give the clear picture of the marketing charges and margins at different levels of marketing of Cakes: Table No THE BAKER S MARKETING CHARGES AND MARGINS IN CASE OF CAKE Head Rs. Rs. Rs. % of S.P. 1. Selling Price Less: 2. Manufacturing Cost Marketing Charges: *Commission to Distributor *Delivery Van *Wrapping Expenses *Staff Salary *Advertisement *Wastage Total Marketing Charges Total (2+3) Profit/Marketing Margin (1-4) Source: Personal Survey. 105

21 Table No THE DISTRIBUTOR S MARKETING CHARGES AND MARGINS IN CASE OF CAKE Head Rs. Rs. Rs. % of S.P. 1. Selling Price Less: 2. Purchasing Cost Marketing Charges: *Commission to Retailers *Delivery Van * Warehouse/Shop Expenses *Staff Salary * Wastage Total Marketing Charges Total (2+3) Profit/Marketing Margin (1-4) Source: Personal Survey. Table No THE RETAILER S MARKETING CHARGES AND MARGINS IN CASE OF CAKE Head Rs. Rs. Rs. % of S.P. 1. Selling Price Less: 2. Purchasing Cost Marketing Charges: * Preservation Cost *Staff Salary * Wastage Total Marketing Charges Total (2+3) Profit/Marketing Margin (1-4) Source: Personal Survey. 106

22 Table No CONSOLIDATED TABLE SHOWING MARKETING CHARGES AND MARGINS AT DIFFERENT LEVELS IN CASE OF CAKE Manuf./ Marketing Selling Level Profit/Margin Purch. Cost Charges Price Baker Distributor Retailer Total Source: Chap. IV & Table No to From the analysis of table no it is revealed that the Baker has to incur Rs (31.78% of S.P.) per kg of Cake as marketing charges which include Rs (21.97% of S.P.) as commission to distributors, Rs (3.53% of S.P.) as delivery van expenses, Rs (2.79% of S.P.) as wrapping expenses, 95 paisa (.75% of S.P.) as staff salary, Rs (1.96% of S.P.) as advertisement expenses and Re (.78% of S.P.) as the wastage. His manufacturing cost comes to Rs (66.65% of S.P.) per kg of this product. Thus the total cost computes to Rs (98.43% of S.P.) per kg of Cake. At this level the selling price of this product is Rs per kg. Thus the profit or margin remains Rs (1.57% of S.P.) per kg. The marketing margins seem quite reasonable at this level because this product is manufactured and sold at large quantity and give the satisfactory return to the Bakers. Among the marketing charges incurred by the bakers delivery van expenses, wrapping expenses and advertisement expenses are very high which should be reduced to a considerable level. 107

23 The table no reveals that the distributor has to spend Rs (15.76% of S.P.) per kg of this product as marketing charges. In these charges commission to retailers constitutes to Rs (12.57% of S.P.), expenses of delivery van remain to Rs (1.61% of S.P.), warehouse/shop expenses Rs (.68% of S.P.), staff salary 90 paisa (.58% of S.P.) and wastage 50 paisa (.32% of S.P.). His purchasing price is Rs (81.99% of S.P.) per kg of this product. Thus the total cost constitutes to Rs (97.75% of S.P.). The selling price of this product is Rs per kg at this level. Thus per kg marketing margin computes to Rs.3.50 (2.25% of S.P.). At distributor s level the marketing margins seem to be quite reasonable as the distributor sells this product in a huge quantity and earns the satisfactory profit as a whole. So far as the marketing charges are concerned, the delivery van expenses seem to be slightly high which should be reduced to a considerable level. From the analysis of table no it is noted that the retailer incurs only Rs 6.55 (3.74% of S.P.) per kg as the marketing charges which include the preservation cost Rs (2.99% of S.P.), staff salary 80 paisa (.46% of S.P.) and wastage 50 paisa (.29% of S.P.). His purchasing cost is Rs (88.83% of S.P.) per kg of Cake. Thus the total cost comes to Rs (92.57% of S.P.). The selling price of this product is Rs per kg at this level. Thus the marketing margin of this product computes to Rs (7.43% of S.P.) at retailer s level. 108

24 At retailer s level the marketing margins seem to be quite reasonable as a retailer can not survive below this margin level as his sale of this product remains in very small quantity. As far as the marketing charges are concerned, the preservation cost is very high which should be reduced upto Rs per kg of Cake. Table no clears the position of marketing charges and margins in a consolidated form very well. It clears that the Baker sells Cake at a price of Rs per kg and his manufacturing cost and marketing charges are Rs and Rs per kg respectively. Thus his total cost per kg computes to Rs and profit margin Rs per kg. At distributor s level the selling price remains to Rs per kg and his purchase price and marketing charges come to Rs and Rs per kg respectively. Thus his total cost computes to Rs and marketing margins to Rs per kg. At retailer s level the selling price of Cake remains to Rs per kg and his purchase price and marketing charges come to Rs and Rs per kg respectively. Thus the total cost of this product computes to Rs per kg and marketing margins to Rs per kg. It is also noted that in case of Cake total marketing charges are Rs and marketing margins Rs per kg. Thus the total marketing cost computes to Rs per kg of Cake. In case of this product the marketing margins seem to be quite reasonable because no manufacturer or trader can exist in the market below this margin level. But so far as the marketing charges are concerned delivery van expenses, warehouse expenses and 109

25 advertisement expenses at Baker s level, delivery expenses at distributor s level and preservation cost at retailer s level are considerably high which should be reduced to the reasonable level. IV MARKETING CHARGES AND MARGINS IN CASE OF PATTIES The tables from to give the clear picture of the marketing charges and margins at different levels of marketing of Patties: Table No THE BAKER S MARKETING CHARGES AND MARGINS IN CASE OF PATTIES Head Rs. Rs. Rs. % of S.P. 1. Selling Price Less: 2. Manufacturing Cost Marketing Charges: *Commission to Distributor *Delivery Van *Wrapping Expenses *Staff Salary *Advertisement *Wastage Total Marketing Charges Total (2+3) Profit/Marketing Margin (1-4) Source: Personal Survey. 110

26 Table No THE DISTRIBUTOR S MARKETING CHARGES AND MARGINS IN CASE OF PATTIES Head Rs. Rs. Rs. % of S.P. 1. Selling Price Less: 2. Purchasing Cost Marketing Charges: *Commission to Retailers *Delivery Van * Warehouse/Shop Expenses *Staff Salary * Wastage Total Marketing Charges Total (2+3) Profit/Marketing Margin (1-4) Source: Personal Survey. Table No THE RETAILER S MARKETING CHARGES AND MARGINS IN CASE OF PATTIES Head Rs. Rs. Rs. % of S.P. 1. Selling Price Less: 2. Purchasing Cost Marketing Charges: * Preservation Cost *Staff Salary * Wastage Total Marketing Charges Total (2+3) Profit/Marketing Margin (1-4) Source: Personal Survey. 111

27 Table No CONSOLIDATED TABLE SHOWING MARKETING CHARGES AND MARGINS AT DIFFERENT LEVELS IN CASE OF PATTIES Manuf./ Marketing Selling Level Profit/Margin Purch. Cost Charges Price Baker Distributor Retailer Total Source: Chap. IV & Table No to From the analysis of table no it is revealed that the Baker has to incur Rs (26.35% of S.P.) per kg of Patties as marketing charges which include Rs (17.57% of S.P.) as commission to distributors, Rs (3.38% of S.P.) as delivery van expenses, Rs (2.36% of S.P.) as wrapping expenses, 90 paisa (1.22% of S.P.) as staff salary, 75 paisa (1.01% of S.P.) as advertisement expenses and 60 paisa (.81% of S.P.) as the wastage. His manufacturing cost comes to Rs (71.62% of S.P.) per kg of this product. Thus the total cost computes to Rs (97.97% of S.P.) per kg of Patties. At this level the selling price of this product is Rs per kg. Thus the profit or margin remains Rs (2.03% of S.P.) per kg. The marketing margins seem quite reasonable at this level because this product is manufactured and sold at large quantity and give the satisfactory return to the Bakers. Among the marketing charges incurred by the bakers delivery van expenses, wrapping expenses and advertisement expenses are very high which should be reduced to a considerable level. 112

28 The table no reveals that the distributor has to spend Rs (12.64% of S.P.) per kg of this product as marketing charges. In these charges commission to retailers constitutes to Rs (6.90% of S.P.), expenses of delivery van remain to Rs (2.13% of S.P.), warehouse/shop expenses Rs (2.01% of S.P.), staff salary 90 paisa (1.03% of S.P.) and wastage 50 paisa (.57% of S.P.). His purchasing price is Rs (85.06% of S.P.) per kg of this product. Thus the total cost constitutes to Rs (97.70% of S.P.). The selling price of this product is Rs per kg at this level. Thus per kg marketing margin computes to Rs (2.30% of S.P.). At this level the marketing margins seem to be quite reasonable as the distributor sells this product in a huge quantity and earns the satisfactory profit as a whole. As far as the marketing charges are concerned, the delivery van expenses and warehouse/shop expenses are slightly high which should be reduced to a reasonable level. From the analysis of table no it is noted that the retailer incurs only Rs (1.61% of S.P.) per kg as the marketing charges which include the preservation cost 80 paisa (.86% of S.P.), staff salary 55 paisa (.59% of S.P.) and wastage 15 paisa (.16% of S.P.). His purchasing cost is Rs (93.55% of S.P.) per kg of Patties. Thus the total cost comes to Rs (95.16% of S.P.). The selling price of this product is Rs per kg at this level. Thus the marketing margin of this product computes to Rs (4.84% of S.P.) at retailer s level. At this level the marketing charges and margins seem to be quite reasonable as a retailer can not survive below this margin level as his sale of this product remains in very small quantity. 113

29 Table no clears the position of marketing charges and margins in a consolidated form very well. It clears that the Baker sells Patties at a price of Rs per kg and his manufacturing cost and marketing charges are Rs and Rs per kg respectively. Thus his total cost per kg computes to Rs and profit margin Rs per kg. At distributor s level the selling price remains to Rs per kg and his purchase price and marketing charges come to Rs and Rs per kg respectively. Thus his total cost computes to Rs and marketing margins to Rs per kg. At retailer s level the selling price of Patties remains to Rs per kg and his purchase price and marketing charges come to Rs and Rs per kg respectively. Thus the total cost of this product computes to Rs per kg and marketing margins to Rs per kg. It is also noted that in case of Patties total marketing charges are Rs and marketing margins Rs per kg. Thus the total marketing cost computes to Rs per kg of Patties. In case of this product the marketing margins seem to be quite reasonable because no manufacturer or trader can exist in the market below this margin level. So far as the marketing charges are concerned delivery van expenses, wrapping expenses and advertisement expenses at Baker s level and delivery van expenses and warehouse/shop expenses at distributor s level seem to be slightly high which should be reduced to a considerable level. 114

30 V MARKETING CHARGES AND MARGINS IN CASE OF PASTRIES The tables from to give the clear picture of the marketing charges and margins at different levels of marketing of Pastries: Table No THE BAKER S MARKETING CHARGES AND MARGINS IN CASE OF PASTRIES In Rs. Per Kg.) Head Rs. Rs. Rs. % of S.P. 1. Selling Price Less: 2. Manufacturing Cost Marketing Charges: *Commission to Distributor *Delivery Van *Wrapping Expenses *Staff Salary *Advertisement *Wastage Total Marketing Charges Total (2+3) Profit/Marketing Margin (1-4) Source: Personal Survey

31 Table No THE DISTRIBUTOR S MARKETING CHARGES AND MARGINS IN CASE OF PASTRIES Head Rs. Rs. Rs. % of S.P. 1. Selling Price Less: 2. Purchasing Cost Marketing Charges: *Commission to Retailers *Delivery Van * Warehouse/Shop Expenses *Staff Salary * Wastage Total Marketing Charges Total (2+3) Profit/Marketing Margin (1-4) Source: Personal Survey. Table No THE RETAILER S MARKETING CHARGES AND MARGINS IN CASE OF PASTRIES Head Rs. Rs. Rs. % of S.P. 1. Selling Price Less: 2. Purchasing Cost Marketing Charges: * Preservation Cost *Staff Salary * Wastage Total Marketing Charges Total (2+3) Profit/Marketing Margin (1-4) Source: Personal Survey. 116

32 Table No CONSOLIDATED TABLE SHOWING MARKETING CHARGES AND MARGINS AT DIFFERENT LEVELS IN CASE OF PASTRIES Manuf./ Marketing Selling Level Profit/Margin Purch. Cost Charges Price Baker Distributor Retailer Total Source: Chap. IV & Table No to From the analysis of table no it is revealed that the Baker has to incur Rs (28.01% of S.P.) per kg of Pastries as marketing charges which include Rs (19.93% of S.P.) as commission to distributors, Rs (2.29% of S.P.) as delivery van expenses, Rs (2.63% of S.P.) as wrapping expenses, 95 paisa (.71% of S.P.) as staff salary, Rs (1.70% of S.P.) as advertisement expenses and Re (.75% of S.P.) as the wastage. His manufacturing cost comes to Rs (70.11% of S.P.) per kg of this product. Thus the total cost computes to Rs (98.12% of S.P.) per kg of Pastries. At this level the selling price of this product is Rs per kg. Thus the profit or margin remains Rs (1.88% of S.P.) per kg. The marketing margins seem to be quite reasonable at this level because this product is manufactured and sold at large quantity and give the satisfactory return to the Bakers. It was noted that among the marketing charges delivery van expenses, wrapping expenses and advertisement expenses are very high at Baker s level which should be reduced to a reasonable level. 117

33 The table no reveals that the distributor has to spend Rs (14.11% of S.P.) per kg of this product as marketing charges. In these charges commission to retailers constitutes to Rs (11.60% of S.P.), expenses of delivery van remain to Rs (.94% of S.P.), warehouse/shop expenses Rs (.88% of S.P.), staff salary 80 paisa (.50% of S.P.) and wastage 30 paisa (.19% of S.P.). His purchasing price is Rs (83.39% of S.P.) per kg of this product. Thus the total cost constitutes to Rs (97.50% of S.P.). The selling price of this product is Rs per kg at this level. Thus per kg marketing margin computes to Rs (2.50% of S.P.). At this level the marketing charges and margins seem to be quite reasonable as the distributor sells this product in a huge quantity and earns the satisfactory profit as a whole. From the analysis of table no it is noted that the retailer incurs only Rs (3.37% of S.P.) per kg as the marketing charges which include the preservation cost Rs (2.64% of S.P.), staff salary 80 paisa (% of S.P.) and wastage 50 paisa (.28% of S.P.). His purchasing cost is Rs (89.61% of S.P.) per kg of Pastries. Thus the total cost comes to Rs (92.98% of S.P.). The selling price of this product is Rs per kg at this level. Thus the marketing margin of this product computes to Rs (7.02% of S.P.) at retailer s level. At this level the marketing margins seem to be quite reasonable as a retailer can not survive below this margin level as his sale of this product remains in very small quantity. 118

34 So far as the marketing charges are concerned, the preservation cost is too high which is required to be reduced reasonably. Table no clears the position of marketing charges and margins in a consolidated form very well. It clears that the Baker sells Pastries at a price of Rs per kg and his manufacturing cost and marketing charges are Rs and Rs per kg respectively. Thus his total cost per kg computes to Rs and profit margin Rs per kg. At distributor s level the selling price remains to Rs per kg and his purchase price and marketing charges come to Rs and Rs per kg respectively. Thus his total cost computes to Rs and marketing margins to Rs per kg. At retailer s level the selling price of Pastries remains to Rs per kg and his purchase price and marketing charges come to Rs and Rs per kg respectively. Thus the total cost of this product computes to Rs per kg and marketing margins to Rs per kg. It is also noted that in case of Pastries total marketing charges are Rs and marketing margins Rs per kg. Thus the total marketing cost computes to Rs per kg of Pastries. In case of this product the marketing margins seem to be quite reasonable because no manufacturer or trader can exist in the market below this margin level. But delivery van expenses, wrapping expenses and advertisement expenses at Baker s level and preservation cost at retailer s level are too high which should be reduced reasonably. 119

35 VI MARKETING CHARGES AND MARGINS CASE OF BURGERS IN The tables from to give the clear picture of the marketing charges and margins at different levels of marketing of Burgers: Table No THE BAKER S MARKETING CHARGES AND MARGINS IN CASE OF BURGERS Head Rs. Rs. Rs. % of S.P. 1. Selling Price Less: 2. Manufacturing Cost Marketing Charges: *Commission to Distributor *Delivery Van *Wrapping Expenses *Staff Salary *Advertisement *Wastage Total Marketing Charges Total (2+3) Profit/Marketing Margin (1-4) Source: Personal Survey

36 Table No THE DISTRIBUTOR S MARKETING CHARGES AND MARGINS IN CASE OF BURGERS Head Rs. Rs. Rs. % of S.P. 1. Selling Price Less: 2. Purchasing Cost Marketing Charges: *Commission to Retailers *Delivery Van * Warehouse/Shop Expenses *Staff Salary * Wastage Total Marketing Charges Total (2+3) Profit/Marketing Margin (1-4) Source: Personal Survey. Table No THE RETAILER S MARKETING CHARGES AND MARGINS IN CASE OF BURGERS Head Rs. Rs. Rs. % of S.P. 1. Selling Price Less: 2. Purchasing Cost Marketing Charges: * Preservation Cost *Staff Salary * Wastage Total Marketing Charges Total (2+3) Profit/Marketing Margin (1-4) Source: Personal Survey. 121

37 Table No CONSOLIDATED TABLE SHOWING MARKETING CHARGES AND MARGINS AT DIFFERENT LEVELS IN CASE OF BURGERS Manuf./ Marketing Selling Level Profit/Margin Purch. Cost Charges Price Baker Distributor Retailer Total Source: Chap. IV & Table No to From the analysis of table no it is revealed that the Baker has to incur Rs (28.84% of S.P.) per kg of Burgers as marketing charges which include Rs (19.65% of S.P.) as commission to distributors, Rs (3.84% of S.P.) as delivery van expenses, Rs (2.05% of S.P.) as wrapping expenses, 90 paisa (.80% of S.P.) as staff salary, Rs (1.70% of S.P.) as advertisement expenses and 90 paisa (.80% of S.P.) as the wastage. His manufacturing cost comes to Rs (68.75% of S.P.) per kg of this product. Thus the total cost computes to Rs (97.59% of S.P.) per kg of Burgers. At this level the selling price of this product is Rs per kg. Thus the profit or margin remains Rs (2.41% of S.P.) per kg. The marketing margins seem quite reasonable at this level because this product is manufactured and sold at large quantity and give the satisfactory return to the Bakers. But the delivery van expenses, wrapping expenses and advertisement expenses are quite high which demand for reduction to a reasonable level. 122

38 The table no reveals that the distributor has to spend Rs (14.92% of S.P.) per kg of this product as marketing charges. In these charges commission to retailers constitutes to Rs (8.95% of S.P.), expenses of delivery van remain to Rs (2.61% of S.P.), warehouse/shop expenses 2.80 (2.09% of S.P.), staff salary 90 paisa (.67% of S.P.) and wastage 80 paisa (.60% of S.P.). His purchasing price is Rs (83.58% of S.P.) per kg of this product. Thus the total cost constitutes to Rs (98.50% of S.P.). The selling price of this product is Rs per kg at this level. Thus per kg marketing margin computes to Rs (1.50% of S.P.). At this level the marketing margins seem to be quite reasonable as the distributor sells this product in a huge quantity and earns the satisfactory profit as a whole. But the delivery van expenses and warehouse/shop expenses are quite high which are required to be reduced reasonably. From the analysis of table no it is noted that the retailer incurs only Rs (2.40% of S.P.) per kg as the marketing charges which include the preservation cost 2.10 (1.44% of S.P.), staff salary 90 paisa (.62% of S.P.) and wastage 50 paisa (.34% of S.P.). His purchasing cost is Rs (91.78% of S.P.) per kg of Burgers. Thus the total cost comes to Rs (94.18% of S.P.). The selling price of this product is Rs per kg at this level. Thus the marketing margin of this product computes to Rs (5.82% of S.P.) at retailer s level. 123

39 At this level the marketing charges and margins seem to be quite reasonable as a retailer can not survive below this margin level as his sale of this product remains in very small quantity. Table no clears the position of marketing charges and margins in a consolidated form very well. It clears that the Baker sells Burgers at a price of Rs per kg and his manufacturing cost and marketing charges are Rs and Rs per kg respectively. Thus his total cost per kg computes to Rs and profit margin Rs per kg. At distributor s level the selling price remains to Rs per kg and his purchase price and marketing charges come to Rs and Rs per kg respectively. Thus his total cost computes to Rs and marketing margins to Rs per kg. At retailer s level the selling price of Burgers remains to Rs per kg and his purchase price and marketing charges come to Rs and Rs per kg respectively. Thus the total cost of this product computes to Rs per kg and marketing margins to Rs per kg. It is also noted that in case of Burgers total marketing charges are Rs and marketing margins Rs per kg. Thus the total marketing cost computes to Rs per kg of Burgers. The marketing margins seem quite reasonable at this level because this product is manufactured and sold at large quantity and give the satisfactory return to the Bakers. But at baker s level the delivery van expenses, wrapping expenses and advertisement expenses and at distributor s level delivery van expenses and warehouse/shop expenses are quite high which demand for reduction to a reasonable level. 124