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Marketing For Durable and
Non-Durable GoodsRaman Bhatia
Zeeshan Ansari
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The Meaning of Marketing
Marketing is the performance of business
activities that directs the flow of goods andservices from producer to consumer or user
PRODUCER
Product
CONSUMER
Need
Marketing activities
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What is it?
Durable goods include those manufactured items with anormal life expectancy of three years or longer.
An increase in the amount of durable goods orders mayindicate an expansion in the economy and, ifinflationary, the Federal Reserve could choose to tightenmoney by raising interest rates.
Economic indicator that measures new orders placedwith domestic manufacturers for immediate and future
delivery of factory hard-goods. Levels of, and changes in, Durable Goods Orders are
widely followed as an indicator of factory sectormomentum.
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Why is it important?
Center-stage attention by the financial marketsand the business community the moment it isreleased.
When a orders is a positive sign, they work to
satisfy this demand from customer. When a orders is a negative sign: they will have
to shut down some plants, possibly lay offworkers, or risk unwanted inventories.
Many economy sectors are tied to DurableGoods orders indictor: employment growth,industrial output, productivity, and profits.
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Impact on Market
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Keys to Interpreting the Data
The advance durable goods report is based onresults obtained from 3,500 manufacturesrepresenting 89 industry categories.
A new order is considered if it comes with a
legally binding agreement to purchase a productfor immediate or future delivery.
All numbers are seasonally adjusted butannualized, nor are the dollars amounts
adjusted for inflations. For military equipments, the government relies
on Defense Department data
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Latest ReleaseDurable Goods Orders: overview New orders for manufactured goods in March, up four of the
last five months, increased $11.9 billion or 3.1 percent to$400.2 billion.
This followed a 1.4 percent February increase.
Shipments, up following two consecutive monthlydecreases, increased $5.9 billion or 1.5 percent to $392.9billion.
This followed a 0.6 percent February decrease.
Unfilled orders, up twenty-two of the last twenty-threemonths, increased $12.9 billion or 1.8 percent to $717.3billion. This was at the highest level since the series wasfirst stated on a NAICS basis in 1992 and followed a 1.1
percent February increase. The unfilled orders-to-shipments ratio was 4.92, up from 4.88 in
February.
Inventories, up twelve of the last thirteen months,increased $1.0 billion or 0.2 percent to $484.0 billion. Thisfollowed a slight February increase.
The inventories-to-shipments ratio was 1.23, down from 1.25 inFebruary.
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Latest Release
Inventories
Inventories of manufactured durable goods inMarch, up thirteen consecutive months, increased $0.6billion or 0.2 percent to $298.5 billion, revised from the
previously published 0.3 percent increase. This followeda 0.1 percent February increase.
Inventories of manufactured nondurable goods, upfollowing three consecutive monthly decreases,increased $0.3 billion or 0.2 percent to $185.5 billion.This was due to petroleum and coal products, whichincreased $0.6 billion or 2.0 percent to $28.0 billion.
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Historical Data
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Data Analysis
Based on the information from this indicator, weconclude:
The capital goods orders appear to be around the
corner. Inflation pressure is unlikely, especially when the
negative trend on core capital goods is possible .
Concerns about economic growth are somewhat
released by the increase in capital goods ordersreflecting strong business investment spending inMarch.
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Nondurable goods last less than two
years: Food, clothing, cigarettes, alcohol,but not personal computers!!
The nondurable goods manufacturingindex is an indicator of the economics ofeveryday life.
The index has been published monthly bythe US Federal Reserve Board since 1919.
It complements the durable goodsmanufacturing index.
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Example Of Non Durable Goods
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The log nondurable goods index
1920 1930 1940 1950 1960 1970 1980 1990 2000
0.8
1
1.2
1.4
1.6
1.8
2
2.2
Year
Log10
NondurableGoods
Index
Stock Market crash
Treasure Board closes money supply
Vietnam War ends
World War II begins
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