Selection of Line of Activity for Small Business

The selection of line of activity is very important for small business. This has to be sorted out before any other thing is taken up. Major types of activity are consumer goods and industrial goods. Some relevant influencing factors need be considered in the process of such a selection:

Selection of line of activity

[A] Consumer goods

The three types of consumer goods generally influence merchandising in the following ways:

  1. Convenience goods
  2. Less capable salespersons are needs
  3. Variety for products in one line is not of prime importance
  4. Nearness to competitors is undesirable-
  5. Store hours should usually be longer and still can be profitable
  6. Displays of impulse items are important
  7. Location in store is important
  8. Shopping goods
  9. Location should normally be near competitors so that customers can compare goods.
  10. Ability to explain advantages of merchandise over competing products is essential.
  11. High-rent areas are not essential
  12. More capable and higher-paid salespeople are necessary
  13. Assistance to customers in value determination is important.
  14. Special goods
  15. Attractive, comfortable selling space for customers is important
  16. Advertising can over wider areas of the city productively
  17. Efficiency in installations is important Customer services are a premium item
  18. Special sales may be less important
  19. Publicity emphasis is on location and brands more than on price

[B] Industrial goods

Industrial goods are those products that are sold to other business firms, either for their own consumption or for use in their own manufacture of other products. These goods, too, are extremely varied. They may be classified as follows:

Selection of Line of Activity for Small Business

Industrial Goods: selection of line of activity for small business

  1. Raw materials: Oil, grain, logs, unprocessed tobacco, wool, fresh fruits, etc.
  2. Semi-manufactured goods: sheet aluminum or steel, leather, pig iron, component parts, etc.
  3. Parts: blades for cutting machines, pistons for engines, bearings, as handles, etc
  4. Supplies: cleaning compounds, pi tic bags, wrapping paper, fuel, office stationery, etc.
  5. Machinery and equipment: all machines and equipment items used in the factory, office, or store.

Special considerations for industrial goods

Any small firm selling to industrial users should recognize these special characteristics of industrial sales:

  1. Industrial goods buyers are better informed about the products they buy. They buy products on the basis of performance and not because of advertising or emotion.
  2. Factories will often request products made to their own specifications.
  3. Many industrial goods are sold with the seller providing installation and repair service.
  4. Industrial goods prices are sensitive to changing business conditions.
  5. Many industrial goods are sold directly by the factors to the user without the use of any intermediaries.
  6. There are fewer customers for industrial goods, but the average revenue per sale is usually much higher.
  7. Users of components often inspect producers’ factories.

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