Factors affecting Sales of a Product

Any business, whether a start-up or an established one, put maximum efforts for expanding sales volume because sustained growth in sales is the only key to survival in the market. A company resorts to many means of achieving this end: introducing new products; promoting them through attractive marketing campaigns and schemes; offering discounts and easier payment options. Yet are many other factors which affect the sales of the products of a company.

The factors affecting the sales of a company’s products can be principally divided into two groups:

1. Internal factors
2. External Factors

Internal Factors affecting sales of a product:

These are the factors which essentially originate within the company and are, hence, in the company’s sphere of influence to control.  These can also be termed as the company’s ‘response to market changes’. The growth is company’s sales volume is directly proportionate to the positive control the company is able to exercise over these factors. These internal factors affecting sales of a product include:

1) Company’s product

The largest single critical factor determining the company’s sales growth is the product itself. If your product is satisfying the needs of the consumers at reasonable prices, it will sell. The company needs to be mindful of maintaining its quality and adding or modifying the functions and utilities according to the changing technology and varying tastes and preferences of the consumers.

2) Marketing strategy of the company

The marketing strategy of the company with regards to its product plays a prominent role in affecting the sales. Marketing strategy involves selection of correct target market; brand positioning; correct pricing and choice of suitable distribution channels. This can make a huge impact on the sales of a product.

3) Marketing Personnel of the company

The qualifications and mindset of the company’s marketing force is very important in winning over more customers. Coming up with creative marketing strategies, promotion ideas, backing up these ideas with sound market research and desire to keep oneself acquainted and updated with recent market trends along with professional qualifications – these all factors go a long way in achieving higher sales volume.

4) Technology and Automation

Technological upgradation is one more facet that a company has to take into account while striving to achieve higher sales growth. Investments into newer, smarter technology and automation of business processes like electronic payment facilities, easier and automated order booking, tracking facilities for shipments in transit, electronic redressal of grievances can generate a favourable market base and increase sales.

5) Presence in multiple formats especially in E-commerce

Presence in E-commerce i.e. internet-based selling has become a significant factor affecting the sales of a company. Online catalogues, online shopping and payment, security of customers’ details, wide variety of choices, relatively lower expenses due to absences of costs related to brick-and-mortar models and ability to transcend geographical boundaries to tap market across the continents – the combination of all these factors make digital platforms such as Amazon.com an extremely enticing ensemble.

6) Ability to tap ‘Digital Footprints’ customers

Online shopping confers one very big advantage on the companies – the digital footprint of the customers’ shopping history is available like registering with an e-retailer, browsing through various product categories, preferences, specific shopping on special days, items frequently shopped for – all this data can be used by the company to craft lucrative sales deal and personalised sales messages for the customers resulting in higher sales.

7) Availability of finances

Availability of right amount of capital at crucial junctures such as introducing a new product, expensive brand-building campaign, switching to more sophisticated manufacturing technology require generous amounts of funds. If the company has the same at its disposal, it can exploit the opportunity to introduce newer business methods that can positively affect the sales of its product.

8) Integration with suppliers

Building and maintaining a network of suppliers for sourcing raw materials, components and consumables can affect the sale of finished products of a company because the availability of raw materials at right time ensures seamless manufacturing process and delivery of the right quality of finished goods in the market in right quantity.

External Factors affecting sales of a product :

External factors can also be termed as ‘Macroeconomic Factors’ or ‘Market Changes’. These are the factors affecting sales of product due to interplay of broad economic, political, technological, and competition forces and can significantly affect the sales of the products of a company. They are well beyond the company’s influence to change. The company will have to make befitting strategic moves to respond to these changes. The external factors affecting sales are as follows:

1) Consumers and institutional buyer expectations

The tastes, preferences of the consumers as well as their expectations regarding prices, new features, packaging, delivery, after sales services keep on changing with the time casting a huge impact on demand for the company’s product. The company cannot control these expectations. It has to adapt its production and marketing strategies to meet these new requirements.

2) Economic Cycle

The economy of any country goes through different phases such as growth, expansion, and recession. The demand for a company’s product depends upon which phase is prevalent in the economy. During the growth phase, where demand is robust and consumers have more disposable income, the demand is likely to pick up. During a recession, the economy contracts, the money supply shrinks and so do the demand and supply of a product. Thus, the economic cycle affects the sale of the company’s products.

3) Laws and regulations

Any manufacturer or seller has to adhere to the demands of the laws and statues of the country where he sells his products. The specific pronouncements of laws regarding the legality of the product, minimum pricing requirements, taxes and advertising restrictions affect the sales of a product in that particular country. These requirements dictate the market presence of that product.

4) Competitors’ Market Position

The market position of the competitors’ products determines the sales of the manufacturer’s product in a market. If the competitor has a very strong brand controlling a large market share, its presence can be quite intimidating, affecting the sales of the rivals’ products negatively and vice-versa.

5) Fragmentation and niche markets

With the advent of technology, the sellers are increasingly leaning towards providing more and more customised solutions to the consumers. This has led to the emergence of many niche markets leading to the subdivision of markets in many smaller, specialised segments that may affect the sales of the products of the company.

E.g. in soft drinks market, apart from regular carbonated drink like Coca-cola, here is also Diet-coke for calorie-conscious consumers. Apart from carbonated drinks and diet drinks, now fruit juices, flavoured water, energy drinks like Red Bull and packaged coconut water are also competing for the consumer’s attention. Hence, as against the clear market leader position enjoyed by Coca-cola some years ago, the company has to compete against various niche products. This definitely leads to the erosion of market share of the company.

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