CHAPTER ONE

NATURE OF MARKETING

Learning Objectives.

After completing this chapter you should be able to: -

1) Define Marketing and explain what it is all about.

2) Distinguish between marketing and selling.

3) Explain in simple terms what marketing entails

INTRODUCTION

Marketing is a comparatively modern concept, which until its adoption there was only
selling. In simple terms, it means marketing, which is the assessing and identifying of
needs and wants of potential customers and then satisfying them, did not exist. Only
selling existed i.e. the producing and selling of goods and services without first
identifying and assessing what consumers want.

Modern business have realised that in this competitive world, real success can only be
achieved by adopting “the customer is king’ attitude. This is the underlying premise upon
which the marketing discipline rests. Marketing requires managers to orientate all
company efforts, planning, policies and operations towards the customer. The aim of
Marketing is ‘to know and understand the customer so well, that the product or service
fits the customer and sells itself’ - P. Drucker. With marketing, a firm produces what it
can sell, rather than sell what it can make. In marketing, business is conducted from the
customer’s perspective and not that of the organisation. The customer is therefore the
focal point for all business activities.

Marketing can therefore be regarded as a key discipline for all who wish to operate
successfully in business. In recent years the significance of the marketing concept has
become even more pronounced, with a far wider range of organisations (profit making
and non-profit making) accepting it as an approach to achieving their objectives.

Definition of Marketing

Many authorities and authors have given many definitions. The Chartered Institute of
Marketing (CIM) and Phillip Kotler definitions will be used here.

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1. The Chartered Institute of Marketing Definition

The Chartered Institute of Marketing (CIM) defines Marketing as a “management

process responsible for identifying, anticipating and satisfying customer
requirements profitably”. To understand this definition fully, we need to look at it
in more detail.

(a) Marketing as a Management Process

Management is the process of planning, organising, leading and controlling

business activities. Marketing activities should therefore be planned, organised
and controlled for success to be achieved. Marketing activities like marketing
research, product development, distribution, pricing, promotion, customer
services etc should be planned, organised and controlled for success to be
achieved. Management therefore plays a crucial role if marketing activities are to
be successful. Without proper planning, organising and controlling, marketing
activities are doomed for failure.

(b) Identifying, Anticipating and Satisfying Customer Requirements

Marketing research is used to find out what people want or require and anticipate
what those requirements will be in future. Customer requirements are products
customers want to buy, prices they are willing and able to pay for the products,
where they prefer to buy and the media they use and these should be identified to
enable the organisation to formulate marketing programmes that meet the
customer requirements.

Fulfilling customer needs can therefore be achieved if customer requirements are

identified and then met with the proper marketing programmes. When customers
are satisfied they willingly continue to do business with the organisation,
recommend the organisation’s products to other users and will not accept
substitute products. More importantly when customers are satisfied, this is proof
that the organisation’s products, prices, distribution (place) and promotion
(marketing mix) are really addressing the needs and wants of the customers.
Simply put, the success of any company depends on its ability to satisfy the
customer. Customer delight is therefore the route to long term survival.

(c) Profitably

Customer requirements must be met in a way that is profitable to the organisation.

Profits come from long term customers and consumer satisfaction, and should be
achieved for the long-term survival of the organisation. In Zimbabwe, many
companies have closed citing viability problems as they have failed to generate
the desired level of profits.

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2. The Phillip Kotler Definition

According to Phillip Kotler, marketing is “a social and managerial process by

which individuals and groups obtain what they need and want through creating
and exchanging products and value with others.”

To understand this definition fully we also need to look at it in detail and analyse
the important elements that make up this definition.

(a) Marketing as a Social Process

Marketing has a social responsibility to enhance the well being of the society. For
marketers to stay in business they should demonstrate social responsibility by
developing products and technologies according to sound environmental
principles. Graham Palmer, Managing Editor of the South African Journal of
Marketing and Sales wrote “People are selecting products more on how safe or
environmentally friendly such products are and less on factors such as price and
cost. People are showing that they will support a product if its producers provide
evidence of their social responsibility in manufacturing it”. An organisation
should therefore do business in a way that ensures that requirements and concerns
of the society at large are taken on board. An organisation should produce
products in such a way that there are no harmful effects to the society and the
environment.

(b) Needs and Wants

We can and must distinguish needs from wants.

(i) Needs

A need is a primary and basic requirement, which is a state of felt

deprivation of some basic satisfaction. Needs direct consumers towards
certain behaviour. Examples of needs are food, shelter, clothing etc.
Marketers should be able to identify these in order to meet the needs of
their target markets.

(ii) Wants

A want is a secondary requirement, which is a desire for specific

satisfaction of a deeper need. We all need clothing but the way we satisfy
this need is influenced by individual circumstances. In simple terms wants
are shaped by our socio-economic and cultural backgrounds. Marketers
should define and analyse wants from the consumers point of view e.g. the
need for clothing can be satisfied by wants such as T-Shirts, body top,
shirt, etc.

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(c) Exchange

Marketing has exchange as its central pillar. Exchange is the act of obtaining a
desired object by offering something in return. Without willing exchange there
can be no true marketing and no exchange is possible without actual need being
perceived. Marketing is therefore more concerned with an exchange that will
continue over time as marketers recognise that profits come from long term
association and not from a one-off sale. The importance of long-term customer
relationships have prompted marketers to take Client Relationship Management
(C.R.M) and Customer Retention Strategies (C.R.S). Maintaining and honouring
customer relationships is increasingly being acknowledged as the chief strategic
differentiation for the future and this leads to competitive edges.

(d) Value

Value refers to the consumer’s estimate of the product’s or service’s ability to

satisfy consumer needs. In simple terms value is the desirability of the offer to the
consumer. Willing exchange takes place when consumers perceive products or
services to be of value to them.

SUMMARY

Every organisation needs marketing because marketing is all about first knowing needs
and wants of the target group and then put in place what meets those needs. Profitable
survival of any organisation, depends largely on how the organisation meet the needs of
customers. In any business, the customer should therefore dictate all operations and
activities. Fulfilling customer requirements is therefore a prerequisite in any
organisation.

Examination Questions

1. Using any definition of marketing discuss the implications of your definition to a

marketer (20 marks)

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 CHAPTER TWO
MARKETING MANAGEMENT PHILOSOPHIES

Learning Objectives

After completing this chapter you should be able to:-

1. Explain the Marketing Management Philosophies and how they apply in modern
business.

2. Explain the marketing concept and how it applies to all organisations.

Introduction

Different marketing activities are performed in an organisation and this includes

advertising, sales promotion, personal selling, marketing research, customer services,
product development and many more. The degree to which these activities are carried out
in an organisation depends on the philosophy adopted by the organisation. The nature and
focus of the business determines the philosophy or idea to be adopted.

Definition

The marketing management philosophies refer to the ideas that were developed and that
are still being used today to guide organisations and their activities. The marketing
management philosophies also assist us in tracing how marketing developed to be what it
is today. The five philosophies are: -

(a) Production concept/Production Orientation

(b) Product concept/Product Orientation
(c) Selling concept/Sales Orientation
(d) Marketing concept/Customer Orientation
(e) Societal marketing concept/Societal Orientation.

(a) Production concept/Production Orientation

The production concept states that consumers prefer to buy goods and services
that are widely available and lowly priced. Production orientation results in
management focusing on high production efficiency to minimise costs of
producing and increasing wide distribution coverage. It is assumed that consumers
buy what is available and not wait for what exactly they want. This mostly
applies where there are shortages (where demand exceeds supply). In such a
situation, consumers buy whatever is available. However, the assumption that

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 consumers buy goods and services provided they are available and at affordably
low prices may not always work as there are other consumers who consider other
things rather than price and availability.
(b) Product concept/ Product Orientation

The product concept states that consumers would prefer to buy goods that offer
the best quality, good features and the best performance. Product orientation
results in management improving the product from time to time, in a bid to
improve quality, performance and features. Undue concentration, attention and
emphasis is placed on the product as management believes that it is by providing
high quality and high performance product that they can be successful. However
on the contrary a good product is not a guarantee for success unless it adequately
addresses consumer needs.

(c) Selling Concept/Sales Orientation

The selling concept states that consumers can only buy if they are motivated
through incentives. Sales – orientation assumes that if consumers are left alone
and not motivated and induced, they show resistance and may not buy. Sales –
orientation results in management engaging in aggressive marketing and
promotional efforts. The OK Grand Challenge, Lever Brothers, “Knock Knock
what have you got!” Sales promotions are all efforts to motivate and entice
consumers into buying more.

(d) Marketing concept/Consumer Orientation

The Marketing concept is a consumer – orientated philosophy that states that

success is achieved by identifying needs and wants of target markets and
satisfying them better than competitors. Such consumer – orientation results in
management focusing on needs and wants of customers and thereby doing
business from the consumer’s perspective. Three main aspects make up the
marketing concept namely total company effort, customer satisfaction and
profitability .
Total company effort is a prerequisite to the achievement of company goals. More
Importantly, total customer satisfaction cannot be achieved without the
participation of all other functions and departments. Customer satisfaction is vital
for long term survival of the organisation. It is through satisfying customers that
repeat purchases are obtained. Profitability is also important for continued
existence of the organisation. Consumer – orientation assumes that profits can
only be achieved when customers are satisfied.

(e) Societal Marketing Concept

The societal marketing concept states that success is achieved through identifying
needs and wants of target markets and satisfying them better than competitors in a
way that preserves, enhances or advances the well being of the society. Societal –

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 orientation results in management placing much importance on the interests of the
society. An organisation should not engage into activities that are dangerous to the
society or the environment.

Summary

The marketing management philosophies are ideas that were developed to guide
organisations in their day to day activities. The five philosophies are the production –
orientation, product orientation, sales orientation, marketing or consumer orientation and
the societal orientation.

Production – orientation is when an organisation produces lowly priced goods and makes
efforts to ensure that they are widely distributed. This is normally used in the case of
shortages or where there is a monopoly. For example, where there is maize – meal
shortages in Zimbabwe, under such a situation consumers would just want maize meal
and will not pay attention to the type, quality or colour of the maize meal. Product
orientation is when an organization focuses on quality, performance and features and is
always making improvements. Imagine the number of times Surf has been improved?

Sales – orientation is when an organisation focuses mainly on putting in place incentives.

For example, competitions are introduced to induce consumers. Marketing concept or
consumer orientation is when emphasis is placed on consumer needs and wants.
Customer satisfaction is therefore central and when customers are satisfied one is
guaranteed for success. Societal orientation or societal marketing concept is when public
interest is considered. Business should be conducted in a socially acceptable way.

EXAMINATION QUESTIONS

1(a) Provide an acceptable definition of marketing (2 marks)

(b) Briefly explain what is meant by

i) product orientation (4 marks)

ii) sales orientation (4 marks)
iii) consumer orientation (4 marks)

(a) Briefly explain the purposes of a SWOT Analysis as part of Marketing (6 marks)

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 CHAPTER THREE

ROLE OF MARKETING IN THE NON-PROFIT SECTOR

Learning Objectives

After completing this chapter you should be able to:-

1. Distinguish between a profit organisation and non-profit organisation.

2. Understand the importance of Marketing to all organisations irrespective of their
nature of business.
3. Apply marketing principles to any non-profit organisation.

Introduction

A non-profit making organisation is an organisation that is in existence not to make a

profit but to provide a service to the society. Examples of Non-Profit organisations are
Universities, Street kids Organisations, Churches, Red Cross, Emerald Hill School for the
Deaf, Public Libraries, Police, United Nations (UN), Msasa Project and many more.

Importance of Marketing

Marketing plays an important role in every organisation irrespective of the line or nature
of business or size of the organisation. Every organisation exists for a specific group of
people which in the context of non-profit making organisations would be patients for a
hospital, students for a university, clients for a welfare organisation, and church goers for
a church. In any organisation, marketing entails identifying and knowing the needs and
wants of that group of people before any meaningful operations or activities can take
place. The needs and wants of the target group should determine activities, operations and
arrangements in the organisation. Marketing also places emphasis, on customer
satisfaction, which is an absolute necessity for the long-term survival of the organisation.
Essentially marketing has as much a role to play in non-profit making organisations as it
has in profit making organisations, hence marketing can be applied with equal relevance
to both profit-making and non-profit making organisations.

Application of Marketing Principles in Non-Profit Making Organisations

Competition for customers, clients, membership, attention, and financial support has
compelled non-profit making organisation to adopt marketing principles to: -

a) Determine their mission, objective, strategies and tactics (MOST)

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i) Mission – what is the non-profit making organisations purpose of existence? For
example healing the sick, provide benefits to the less privileged and improve
health and education standards.

ii) Objectives – what does the organisation intend to achieve? For example bigger
membership, changing attitudes of the people etc.

iii) Strategies – what are the broad methods of achieving the

objectives?

iv) Tactics – what specified actions should be undertaken to

achieve the objectives?

(b) Studying the market – a non-profit making organisation should undertake

marketing research to study and understand the market in terms of characteristics,
trends and potential of the market. Such an understanding will enable the
organisation to realise its objectives. For example before a public library is
constructed it is important to study the reader market.

(c) Segmentation
When a market is assessed, it becomes possible to subdivide the market into
segments. Segmentation plays an important role as it enables the organisation to
better satisfy the needs of these beneficiaries. Using the Public library example,
segmentation of the reader market will bring about subgroups or segments of
readers such as pre-school, primary school, secondary school, business
management, accounting, marketing, politics and other readers. In this case
segmentation will enable the proper books and study materials to be put in place
for each segment of readers.

(d) Targeting
After segmentation, an organisation is able to target or select the most attractive
segments. In the public library example, management may decide to ignore other
segments and then strive to satisfy needs of some segments. For example the pre-
school segment may be ignored.

(e) Positioning
It is important that the organisation occupies important positions in the mind of
the selected segments in comparison to competition. A public library can position
itself as the best in terms of study environment and study material.

SUMMARY

Every organisation needs marketing because marketing is all about first knowing needs
and wants of the target group and then putting in place what meets those needs.

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Marketing is therefore of value to non-profit making organisations i.e. those that exist not
to make a profit but to provide a service to the society. Marketing principles such as
marketing research can also be used by non-profit organisations for them to prosper.
Non-profit making organisations are different from profit making organisations because
the latter exist to obtain tangible benefits such as financial rewards and strive to satisfy
needs of those that can pay for products or services.

Conclusively non-profit making organisations should be market orientated and focus on

satisfying needs of their clients, beneficiaries or customers for them to achieve success.

Examination Questions

1(a) Explain the term “non profit organisation” (5 marks)

(b) Use examples to contrast the different motivations within a profit and non-profit
making organisation (15 marks)

2(a) Explain why the marketing concept can apply to all organisations (10 marks)

(b) Choose two non-profit organisations and show how marketing is of value to them
(10 marks)

3(a) What are: -

i) Mission (2 Marks)
ii) Objectives (2 Marks)
iii) Strategy (2 Marks)
iv) Tactics (2 Marks)

b) Why is an understanding of MOST elements important to an organisation.

(12 marks)

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 CHAPTER FOUR
MARKETING ENVIRONMENT

Learning Objectives.

After completing this chapter you should be able to: -

(1) Define the marketing environment and explain its importance to any organisation.
(2) Identify marketing environmental factors and explain how they would affect an
organisation of your choice

Introduction

Organisations do not exist in a vacuum but exist in a situation where there are other
players whose actions and activities impact on the organisation. The uncertainty that
characterise the surroundings of every organisation makes it imperative for organisations
to identify and evaluate their surroundings to determine how they can affect their
operations.

Because of the uncertainty and dynamic nature of the environment there is a greater need
for organisations to be proactive and forecast changes that are most likely to take place.
The key to survival therefore lies in adopting in a “chameleon style” to the threats and
opportunities in the marketing environment. A successful organisation today would not
be successful in five years to come if it does not adjust to changes in the environment.

Definition

A Company’s marketing environment consists of the factors and forces outside marketing
that affect, or obstruct management’s ability to develop and maintain successful
transactions and relationships with customers. In simple terms, the marketing
environment is the milieu in which the firm is operating. The marketing environment in
which we operate is not controlled by us and it is dynamic, hence there is need to
constantly monitor it to identify threats and opportunities and to adapt to the changing
conditions. The marketing environment is constantly spinning out opportunities as much
as it is spinning out threats, hence for success to be achieved, marketers should recognise
and exploit opportunities when they arise. The true marketer should see opportunities
where others see doom and gloom, should see light where others see darkness and should
stand strong where others fall.

Macro-environment and micro-environment

The marketing environment is made up of the macro-environment and micro-

environment.

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Macro-environment

The macro-environment consists of the lager societal forces that affect all the actors in
the company’s micro-environment. The macro-environment factors are: -

1) Socio-cultural S
2) Technological T
3) Economic E
4) Education E
5) Political P
6) Legal L
7) Ecological (Natural) E

The above mentioned macro-environmental factors are known by the acronym

STEEPLE. The acronym (PEST) Political, Economic, Socio-cultural and Technological
has since been further developed to STEEPLE.

1. Socio and Cultural Environmental

The ethics, culture, language, attitudes and behaviour of a society will have a
direct influence on the type of goods and services demanded. The social and
cultural environment affects how and why people behave as they do and this in
turn affects buyer behaviour. Marketers should develop products and
communicate (advertise) in a way that is socially and culturally acceptable.

2. Technological Environment

The technological environment consists of forces that affect new technology and
the development of new products and services. Technology is constantly changing
and we can no longer assume that our current range of products and services will
continue to be demanded by our customers. Marketers should therefore pay
attention to the accelerating pace of technological changes and increased
popularity with use of each technology. Companies that do not keep up to
technological changes will find their products/services out of date and they will
miss out on new opportunities. For example technological developments like the
internet and Online shopping, whose importance is growing at a frightening pace
will reshape the way everyone does business. In his article “Online Shopping”
Grahame Palmer wrote, “If you are in the business of selling, you have no choice
but to be in the business of electronic communications. Any retailer who fails to
take advantage now of the Internet may not to be around in ten years from now”.
In addition new technologies may bring efficiency in the production of goods.

3. Economic Environment

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 The economic environment consists of factors that affect consumer purchasing
and consumption patterns. Improvement in economic conditions encourages
consumer confidence and willingness to spend and thereby stimulate business
expansion, whilst unfavourable economic conditions discourage spending.
Economic factors to be looked at are inflation, exchange rates, disposable income
levels, and cost of labour and raw materials.

(a) Inflation

In a period of inflation (when prices persistently move upwards) consumers may

become resistant to price increases resulting in demand for goods and services
falling sharply. If demand falls, profits also fall as well. For example there has
been a significant reduction in the demand for maize meal from milling
companies such as National Foods and Blue Ribbon Foods in the past four years
as a result of price increases, and consumers have resorted to grinding mills. The
bottom line is that in a period of inflation, consumers switch to cheaper goods and
do-it-yourself styles and this influences marketing decisions.

(b) Interest Rates

The interest rate is the cost of borrowing money. High interest rates discourage
investment and companies cannot expand. High interest rates also discourage
credit borrowing and this may lead to a reduction in demand for high cost capital
items e.g. houses, vehicles, furniture etc as consumers normally borrow to buy
such items. It is therefore important for marketers to adapt accordingly for them to
survive the turbulent environment.

(c) Exchange Rates

The value of the local currency in relation to other currencies will have a major
effect to the international competitiveness of local products. For example the
weak Zimbabwean dollar has led to poor performance by some companies, whilst
others are doing well as they have discovered the benefits of exporting and are
exploiting the weak Zimbabwean dollar. In other words the hostile environment
presents threats as much as it presents opportunities.

(d) Disposable Income and Income Levels

Disposal income is the money left when all essential payments have been made.
For example after paying rent, electricity, water and other essentials whatever is
left is the disposal income. The higher the income levels the larger the disposal
income and the wider the choice of how it is used. Marketers should therefore
monitor changing levels of disposable income and income levels as they influence
marketing decisions.

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(e) Cost of labour and Raw Materials

Cost of labour and raw materials have a bearing on pricing decisions. Marketers
should monitor changes in cost of labour and raw materials so as to adjust
marketing programs to suit the changing conditions.

4. Education – Training and Employment

Marketers are interested in the levels of education of people in a given society.

Levels of literacy are important as they have an influence to the long-term
capability of the economy. More importantly levels of education and training have
an impact on the quality of service. In addition literacy levels determine how
marketers can communicate to the market.

5. Political

The course of a country’s politics affect marketing decisions because of political

pressures exerted. Government and legal frameworks make up the political
environment that affect, influence and limit various organisations and individuals
in a given society. The way we behave, the decisions we make and what we buy is
influenced by National and Local Government. Political stability or instability
also plays an important role as it affects the success of an organisation. For
example the farm occupations in Zimbabwe have had a negative impact on the
tourism sector as well as other sectors.

6. Legal

Marketers should be aware of legislation in the form of Business and marketing

Laws that regulate marketing activities in promotion, product development,
labelling, pricing and channels of distribution. Because of the importance of the
legal environment marketers may rely on Legal Advisors to ensure that decisions
they make comply with all relevant legal control measures.

7. Natural Environment
Governments are increasingly becoming concerned about the natural environment
and environmental protection range from awareness not to damage water, earth
and air caused by industrial activities to natural resources that are used in
production. Marketing activities affect or are affected by the natural environment,
hence there is need to constantly monitor it. Concern about environmental
protection has given rise to the GREEN MOVEMENT an International
Organisation that makes efforts to prevent further damage to the natural
environment. Global concern for the environment extends beyond industrial
pollution, hazardous waste disposal, and rampant deforestation to include issues
that focus directly on consumer products.

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 In making decisions marketers should therefore take “green” and consumer issues
seriously. Marketers should play a critical role in ensuring preservation,
protection and sustainable use of our natural resources. The government of
Zimbabwe has responded by introducing Environmental Management Act, a new
law that would guard against further environmental rape.

Micro Environment

The micro-environment consists of the factors in the company’s immediate environment

that affect a specific organisation’s ability to serve its markets. For example, changes in
the micro-environment of Chibuku Breweries will affect Chibuku Breweries only and
will not affect other companies. Whilst changes in the macro-environment will affect
every organisation. Micro-environment factors are, the company, suppliers, marketing
intermediaries, customers, competitors and publics.

1. The Company
The Company refers to company groups such as top management, finance,
research and development, production etc. All departments should work as one
team for the organisation to be successful. Implementation of marketing plans will
depend largely on the participation of other departments, hence the need for team
effort. Marketers should make use of internal marketing, which ensures that views
of staff are canvassed before decisions are made. Winning the support of all staff
members is a prerequisite to the success of an organisation.

2. Suppliers
Suppliers provide inputs, raw materials and component parts needed for the
production of goods and services. Supply availability and supply shortages are
developments that can seriously affect marketing. Suppliers not only affect a
firm’s ability to produce goods and services but also affect the actual product and
the final price. This in-turn would affect profit margins. Price trends of key inputs
should therefore be monitored as increases in supply costs will cause price
increases on goods and services resulting in detrimental effects on sales.

3. Marketing Intermediaries
These are firms that assist the company in promoting, selling and distributing
goods to final buyers as they provide the vital link between an organisation and
customers. Marketing Intermediaries include middlemen, physical distribution
firms, marketing services agencies and financial intermediaries.

a) Middlemen
These are distribution channel firms that help the company find customers and
make sales to them. Wholesalers such as Jaggers and retailers such as T.M play an
important role as they stock products where customers are located.

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b) Physical Distribution Firms
These assist the company to move products from their point of origin to their
destinations. Trucking companies such as Clan and Swift specialise in moving
goods from one point to another and in selecting physical distribution firms,
safety, cost and speed should be looked at.

c) Marketing Services Agencies

Advertising agencies, media firms and Consulting companies play an important
role as they help the company to target and promote its goods and services to the
right market hence marketers should continuously monitor them. These provide
specialist services, which are important to the organisation.

d) Financial Intermediaries
Financial Intermediaries like banks, credit and insurance companies help finance
transactions or insure against risks associated with the selling and buying of
products. Marketers should assess the impact of any changes in the operations of
the financial intermediaries to the organisation.

4. Competitors
These are organisations that provide more or less the same product or service with
us for the business patronage of the same customers. Continuous scanning of
competition action is vital, as success of an organisation will depend on its ability
to satisfy needs and wants of consumers better than its competitors. It is important
to identify who the competitors are what they offer and their strategies and tactics.
For example, ECONET WIRELESS has obtained a bigger market share than
other cellular companies NET ONE and TELECEL because of its ability to satisfy
needs of customers better than competitors. Product development engaged in by
competitors might render a firms offering obsolete, competitive pricing strategy
can have a devastating effect on revenue and promotional tactics can result in
customers selecting competing substitutes. Bearing this in mind it is therefore
imperative to monitor activities of competitors.

5. Customers
A marketer should study five Customer markets as each customer market has its
own special characteristics and buyer behaviour and management must
thoroughly examine and understand these characteristics. The five customer
markets are consumer markets, industrial or institutional markets, reseller
markets, government markets, and export markets.

(a) Consumer Markets

These consist of individuals and households who buy goods and services for
personal consumption. They buy in small quantities and hence their buyer
behaviour is unique.

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(b) Industrial/Institutional Markets
These consist of organisations that buy goods and services for further processing
or for use in the production process. For example Harare Hospital buys food stuffs
in big quantities.

(c) Reseller Markets

These are organisational customers that buy goods and services in order to resell
them at a profit e.g. OK Bazaars. What they buy, when and how they buy is
different from other customer groups.

(d) Government Markets

Government agencies or departments that buy goods and services in order to
produce public services to those who may need them e.g. the Social Welfare
department buys goods to provide services to the disadvantaged and less
privileged.

(e) Export Markets

These are foreign buyers who buy goods and services. Foreign Governments and
organisations buy goods and services for use in their countries. Packaging for
export markets may be different to packaging for domestic markets hence export
markets requirements should be identified. The language used on labels may also
be different.

6. Publics
Publics are groups that have an actual or potential interest and that impact on an
organisation’s ability to achieve its objectives. Marketers should monitor both
external and internal publics. The following external publics should be monitored.

(a) Financial Publics

These are banks, finance and investment houses that influence the company’s
ability to obtain funds.

(b) Government Publics

Government developments should be taken into account as such developments
influence marketing decisions.

(c) Media Publics

Requirements and operations of newspapers, television and radio stations must be
understood by marketers as such media publics assist in promotional activities.

(d) General Publics

The General Publics have a powerful influence on the actions of a firm and their
attitudes to products, services and activities are of major concern to marketers.
Organisations must therefore consider carefully all parties affected by their
actions and plans in order to reduce the likelihood of conflicts. Many companies

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 make large contributions to charity to improve their image in the eyes of the
publics as the image of the company affects the buying of its products.

(e) Citizen – Action Publics

A company’s marketing decisions and actions are subject to scrutiny by consumer

organisations such as Consumer Council of Zimbabwe (CCZ) and Environmental
Groups. Consumer Organisations and Environmental groups affect product
strategy of many firms, some of whom immediately seek competitive advantage
by publicising the fact that their products are environmentally friendly. Consumer
groups have had extensive influence on the safety of products, on trading
conditions, availability of credit, etc. Television programmes such as Consumer
Profile on ZTV 1 have advanced concerns by individual consumers and consumer
groups and alerted the public to dangerous products and questionable business
practices.

Summary

Marketing environment refers to the sum total of factors or variables outside marketing
that influence the continued existence of the marketing organisation. The marketing
environment is of paramount importance to the success of an organisation as it create
particular opportunities and threats and the task of marketers is to identify, evaluate and
utilize opportunities and formulate strategies that reduce impact of threats.

There are two classifications of the marketing environment and these are the Macro
environment and Micro-environment. Macro-environment are the larger societal forces
that affect all organisations irrespective of the nature of business. Macro-environmental
factors are socio-cultural, technological, economic, education, political, legal and the
ecological (natural environment), (STEEPLE). Micro-environmental factors are factors
that affect specific and individual organisation and these are the company, suppliers,
marketing intermediaries, competitors, customers and publics.

The organisation should adjust its operations, activities and marketing programmes (The
7p’s) to suit the environment changes. Flexibility to adapt is therefore important for the
continued existence of the organisation.

In Zimbabwe many companies have gone out of business as they failed to adjust their
operations to the changes taking place in Zimbabwe. The economic environment has
brought untold suffering to Zimbabwean Companies and consumers. For organisations to
survive threats from the environment they should not be reactive but be proactive enough
to forecast political, economic, technological, socio-cultural and other environmental
changes and thereby formulate strategies to deal with the changes when they arise.

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Examination Questions

1 (a) Using a model you are familiar with e.g. (PEST OR STEEPLE) explain
the main elements of an external marketing analysis. (12 marks)

(b) Show by using two examples for each element, What one understands by a
SWOT analysis (8 marks).

2. You are the marketing manager of an upcoming shoe manufacturing company

discuss the Macro-environmental factors that would affect your business and
how? (20 marks)

19
 CHAPTER FIVE
MARKETING ORGANISATION

Learning Objectives.
After completing this chapter you should be able to:-
(a) Show different ways of organising the marketing department.
(b) Explain co-ordination of the marketing function with other functions/departments
(c) Explain the roles, functions and responsibilities of key marketing personnel.
(d) Explain Authority, Accountability, Responsibility and Delegation in the context
of marketing.

Introduction

Organisation is a management function, which entails grouping together similar

activities, and this includes allocating each group of activities to those with a
responsibility to perform the activities. If activities and resources of an organisation are
not organised, objectives of the organisation may not be achieved. Similarly marketing
resources and activities should be organised and co-ordinated for marketing objectives to
be achieved. Marketing organisation becomes an indispensable part of the marketing
function.

Definition

Marketing organisation refers to the way in which marketing activities are grouped,
arranged, allocated and co-ordinated in an organisation. Without marketing organisation
marketing plans can not be a reality, hence marketers should ensure that there is proper
marketing organisation.

Marketing and Other Departments/Functions

It is in the best interest of an organisation that its marketing department/function should

merge harmoniously with other department/functions. The marketing
department/function should be co-ordinated with other departments/functions for success
to be achieved. The marketing department/function should work together with
Production, Finance, Human Resources and others to serve and satisfy the customer.
Customer satisfaction is affected and influenced by the performance of other
departments/functions. Total Company effort, which involves all departments/functions
and every member of the organisation from Top management to the lowest person, is
therefore a prerequisite to achieve customer satisfaction.

The Marketing Department

All marketing activities are brought under one department to ensure co-ordination of all
the marketing activities. Marketing activities are organised in the following ways.

20
1. Organisation by function.
2. Organisation by Product/Brand.
3. Organisation by Market.
4. Organisation by Region.

1) Functional Management Organisation

Marketing Director

Sales Marketing Sales Advertising Customer Services

Promotion Research Manager
Manager Manager
Manager Manager

Organisation by function is when the marketing department is based on marketing

activities or functions to be performed in the organisation. It is appropriate where a
company offers a few products e.g. two products.

Advantages

(i) It is simple in the chain of command, which implies that each subordinate must
have only one manager and should report to one superior. As can be seen in the
diagram each functional specialist report to one boss.
(ii) Supervision is easier as there is a small number of people under one boss. This is
referred to as Span of Control – the number of subordinates working under a
particular manager. In the diagram five specialists report to the Marketing
Director.
(iii) The sections in the marketing department are manned by functional specialists
who are experts in their fields.
(iv) The structure is simple as illustrated in the diagram.

Disadvantages

(i) The Structure is not appropriate for a company which offers a

wide range of products to several markets since no manager is responsible for the
success or failure of individual products.
(ii) Functional specialists tend to concentrate too much on their own functions and
thereby loosing sight of the overall marketing goal.

21
2. Product/brand Management Organisation.

Marketing Director

Customer Advertising Products Marketing Sales

Services & Sales Manager Research Manager
Manager Promotion Manager
Manager

Manager Manager Manager Manager Manager Manager

Salt Rice Flour Cooking maize Stock
Oil Meal Feeds

(i) The Product or Brand Management structural organisation is often employed by

companies that produce a variety of products and or brands. Each manager is
responsible for a specific product or brand.

(ii) The Product/brand Management organisation does not replace the functional
Management organisation but compliment it by providing expertise to the product
or brand managers.

(iii) Functional managers are responsible for controlling and planning marketing
resources whilst products managers are responsible for co-ordinating the use of
these resources into a combined program which serves the needs of the
products/brands for which they are responsible.

(iv) Product/brand management is beneficial in real terms where a company

manufactures a wide range of different products/brands.

Advantages of Product/Brand Management Organisation

(i) The Product/Brand manager is immediately alert to the changing demands of the
market for his/her product.

(ii) Product/Brand managers ensure that no Product/brand is overlooked as they pay

particular attention to individual products.

(iii) The product/Brand management organisation provides a training ground for

young managers who learn more quickly about all the marketing functions in one
job as they need to know about marketing research, advertising, distribution sales
promotion and other marketing functions.

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Disadvantages of Product/Brand Management Organisation

(i) A Product manager does not have adequate if any control over the marketing
resources of selling, advertising and frequently resorts to persuasion to enlist the
help of functional specialists.

(ii) Being a jack of all trades with interests in advertising, sales promotion, selling,
marketing research, a product manager is an expert in none of these activities and
might easily be over-run by functional specialists who have expert knowledge.

(iii) The Product/Brand management organisation is more costly that a single

functional organisation as more people are employed and more resources are
used.

How to make the Product/Brand Management Organisation Effective

(i) For Product/Brand managers to work effectively their authority must be properly
specified and functional managers impelled to support the brand managers.

(ii) Since Product Managers are frequently held responsible for their products
performance they must have sufficient authority to enable them to control factors
for which they are held accountable.

(iii) Products managers should also coordinate the efforts of their product managers so
that they do not put impossible or conflicting demands on functional specialists.

3. REGIONAL MANAGEMENT ORGANISATION

Marketing Director

Regional Regional Regional Regional

Manager Manager Manager Manager
Mashonaland Matebeleland Manicaland Midlands

(i) The Regional Management Organisation is desirable where an

organisation markets products through out the country or across national boarders.
The Regional Marketing Manager markets all products in his/her region.

(ii) Marketing people are assigned to specific countries, regions and districts and this
arrangement allows sales people to settle in a territory and get to know their
customers.

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Advantages

(i) As regions might have different needs and requirements the Regional Manager
will ensure that the marketing mix is adapted to suit needs and requirements
his/her region.

4. MARKET MANAGEMENT ORGANISATION

Marketing Director

Manager Manager Manager Manager Manager

Consumer Industrial Govt. Export Reseller
Market Market market Market Market

The market Management Organisation is ideal where a company sells its products to
various markets e.g. Government markets, consumer markets, industrial markets etc as
such user groups have distinct buying preferences and practices.

The duties of market managers are similar to those of product managers except that
market managers will be responsible for coordinating the marketing effort for their
markets instead of the product.

Advantage

(i) The market manager is hugely knowledgeable about his/her particular market in
terms of characteristics, consumption patterns and buyer behaviour.

Disadvantages

(i) The market Manager is not so knowledgeable about the products sold into that
market, especially if, there are a lot of them, because he/she is particularly
concerned about the market and not the products.

(ii) Different market managers may need very different promotional strategies for one
product for different markets, resulting in more costs for the organisation. For
example promotional strategies and tactics for the same product for local
consumer market are different for those of the export market.

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KEY MARKETING PERSONNEL

1. Product/Brand manager

The functions of a product/brand manager are Preparing a marketing plan for

his/her product. This includes setting objectives and strategies to achieve the
objectives.

(i) Preparing sales forecasts for the product, determining future sales will enable
effecting planning.

(ii) Gathering information about his/her products performance.

(iii) Undertaking pricing, distribution, product development and promotional decisions

for his/her product/brand.

2. Sales Manager

The functions of a sales manager are:

(i) Determining sales force objectives and goals.

(ii) Forecasting and Budgeting
(iii) Organising sales activities, determining sales force size, territory designing and
planning.
(iv) Sales force selection, recruitment, training and motivation.
(v) Evaluation and controlling sales activities and the sales force.

3. Advertising Manager

The Advertising Manager is the head of the advertising function or Advertising

Department and has the following duties and responsibilities.

(i) Determining the Advertising Budget with regards to advertising activities.

(ii) Liaison and cooperation with the advertising Agency.
(i) Planning and controlling production of all advertising material.
(ii) Co-ordinating all advertising activities for the achievement of advertising
objectives.
(iii) Evaluating assessing and selecting advertising agency to work with.

4. Marketing Manager

The Marketing Manager is the head of the marketing function or marketing

department and is involved in planning organising and controlling all marketing
activities. Special duties and responsibilities of the marketing manager include:-

(i) Formulation of marketing plans both short term and long term.

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(ii) Establishing marketing objectives and the strategies and tactics to achieve the
stated objectives in line with the corporate mission and goals of the organisation.
(iii) Organisation and co-ordination of marketing resources.
(iv) Developing Product, Price, Place and Promotion
(Marketing Mix) for the long-term survival of the organisation.
(v) Overseeing and controlling all marketing activities such as Marketing Research,
Personal selling, Advertising, sales Promotion, product development, Customer
Services, After Sales service, pricing, distribution and many more.
(vi) Putting in place a marketing budget for the performance and implementation of all
marketing activities.

Authority

Authority is the empowerment of somebody to take action. In simple terms authority is

what gives managers the right to direct subordinate’s activities. Managers have a right
(authority) to give lawful orders and subordinates have an obligation to obey. In
marketing the marketing managers have authority to make marketing decisions on
product development, pricing, distribution and promotion. However authority can be
delegated to subordinates so that they can perform certain actions.

Responsibility

Responsibility is an obligation that rest with a subordinate to execute a particular task

according to orders received. Responsibilities are in the form of job descriptions. A sales
person is responsible for selling products to both existing and new customers. Once
responsibility is accepted one is expected to do a particular job.

Accountability
This refers to the act of being answerable to decisions, results and profits. Brand
managers are accountable for the success or failure for their brands. When authority has
been delegated for certain actions one becomes accountable.

Delegation

Delegation is the assignment to another person of formal authority and accountability to

specific activities. Delegation of authority by supervisors to subordinates is necessary for
the efficient functioning of an organisation since no superior can personally achieve
activities. Delegation will depend on the ability, expertise and experience of the people
working in the marketing department. In simple terms delegation is the process of
empowering a subordinate to carry out a specific task.

SUMMARY

Marketing organisation refers to the way in which marketing activities are organised,
arranged and co-ordinated. Marketing activities are brought in one department. There are
different ways of arranging or coming up with a marketing department namely functional

26
structure, Product/Brand Structure, Market Structure and Regional Structure. It is
important for an organisation to consider its resources, size of the organisation and the
nature of customers in coming with the proper structure that facilitates attainment of
organisational goals.

There are key marketing personnel who perform different marketing activities. These
include the Marketing Manager, Marketing Research Manager, Product/brand Manager
and many more.

As marketing is referred to as the management process responsible for identifying,

anticipating and satisfying customer requirements there are aspects that are used and that
play an important role for the successful implementation of marketing activities and these
are authority, responsibility, accountability and delegation, Authority refers to the right to
give orders and directives and this is important in marketing as somebody should give
such orders, responsibility refers to the obligation to execute certain tasks. In marketing
different personnel should be responsible for certain functions, delegation refers to the
process of assigning a portion of the work load to others and this is important for
marketing activities to be carried out effectively. It is also important that marketing
personnel are accountable and answerable to the different functions they undertake.

In conclusion it must be stated that unless marketing activities are properly arranged,
divided and co-ordinated marketing objectives will not be achieved.

EXAMINATION QUESTIONS

1. (a) Draw an outline organizational chart for a head office

marketing group (8 marks).
(b) Using the management post in diagram.

Explain

(i) Corporate Authority (5 marks)

(ii) Corporate Responsibility (5 marks)
(iii) Management accountability (5 marks)
(iv) Management delegation (5 marks)

2. A friend is considering whether to apply for a post as a brand manager responsible

for a range of consumer durables. In a letter to our friend describe what the job
will entail. (20 marks).

3. A friend is considering whether to apply for a post as a sales office manager. In a

letter to your friend describe what the job entails. (20).

4. A friend is considering whether to apply for a post as a sales office manager. In a

letter to your friend describe what the job entails. (20 marks).

27
5. A friend is considering whether to apply for a post as a regional manager for a
chain of 10 high street dry cleaning shops. In a letter to your friend describe what
the job entail (20 marks).

6. A friend is considering whether to apply for a post as the marketing manager for a
five star hotel that is part of a major international plan. In a letter to your friend
describe what the job entail (20 marks).

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 CHAPTER SIX
MARKETING RESEARCH, ANALYSIS AND DECISION

Learning Objectives.

After completing this chapter you should be able to:-

1. Explain the importance of information and the reasons for marketing research.
2. Identify and explain elements of the marketing information system (M.k.I.S)
3. Distinguish between Marketing Research and Market Research.
4. Explain the marketing research process.
5. Distinguish between primary (field) and secondary (Desk) research
6. Explain the difference between quantitative and qualitative data
7. Describe forms of marketing research.
8. Describe Ad-hoc and continuous research and how they assist marketing
management.

INTRODUCTION

Marketing Research is a key to the success of any organisation as it ensures availability

of information to decision-makers. Without marketing research, an organisation is blindly
going about the job of finding its way. Marketing Research should provide an
organisation with a well-lit path for doing business and achieving its marketing
objectives.

“Any organisation that ignores marketing research is like a doctor who prescribes
treatment to a patient without undertaking a diagnosis of the patient” wrote one Author.
Such a doctor can not prescribe the correct treatment. Similarly any organisation that
prescribes a marketing mix for any consumers without using marketing research methods
and techniques to find out needs of the consumers cannot be successful.

Marketers must therefore rely on marketing research so as to make informed decisions

and informed choices.

The Need for information

Information is the lifeblood of all organisations. Whatever the nature of business

information is a prerequisite for all marketing decisions areas. The more timely and
accurate the information is, the more effective the decision-making. It is therefore
important for marketers to make effective decisions.

Environmental dynamics have increased the need for accurate and up-to-date marketing
information as marketers require information about potential target markets, customers,
competitors, Intermediaries, STEEPLE factors and any factors that can affect marketing

29
operations. Without information about the foregoing, decisions are made in the dark and
are based on guesswork.

Definitions

1. Marketing Research is the systematic design, collection, analysis and reporting of

data and findings relevant to a marketing situation facing the organisation (Philip
Kotler).

2. Marketing research is the systematic, recording, gathering and analysing of data

about problems relating to the marketing of goods and services. (American
Marketing Association).

Purpose of Marketing Research

The purpose or benefits of Marketing research can be described as follows:-

a) The critical task of Marketing Managers is decision making. For effective

decisions to be made, sufficient information is required. Marketing research
therefore aids the decision-maker by presenting pertinent facts, analysing them
and suggesting possible solutions.

b) Marketing Research is undertaken to understand a marketing problem better. For

example reasons behind a sales decline can be understood better by undertaking
marketing research which will reveal information pertaining to the problem.

c) Marketing Research can help reduce risk by indicating the likely outcome of
certain courses of actions. For example marketing research can reveal the high
risk in International and export markets and thereby enable the organisation to put
in place strategies to reduce risk.

d) Marketing Research helps to identify customer needs. If an organisation adopts

the marketing concept and become customer oriented, there is need to find out
more about the customer needs through marketing research. Marketing research
helps implement the marketing concept.

Marketing Information System (Mk.I.S)

Definition

The marketing information system is defined as a systematic, continuous organisational

structure which consist of people, equipment and procedures and these interact to gather,
process and store data from the organisations external and internal environment and
distribute timely and accurate information to marketing decision-makers.

30
Components/Elements of a Marketing Information Systems

The Marketing Information System consists of the following elements:-

a) Internal Records

Internal records information comes from financial statements, sales force report
and manufacturing report. Internal records provide information, which is used to
evaluate marketing performance and to detect problems and opportunities.

b) Marketing Intelligence

This is everyday information about developments in the marketing environment

that helps Managers prepare and adjust marketing plans. Sources of marketing
intelligence include company’s own personnel, suppliers, resellers and customers.

c) Marketing Research

This entails the investigation of all Marketing activities and include:-

a) Market Research – focuses on the market and include:-

i) Analysis of market potential for existing products

ii) Forecasting likely demand for new products
iii) Sales forecasting for all products
iv) Study of market trends i.e. growth or decline of a market.
v) Study of characteristics of the market – in terms of buying and
consumption habits.
vi) Analysis of market shares.

(b) Product Research – Focuses on the product and include:-

i) Customer acceptance of proposed new products.

ii) Comparative studies between competing products.
iii) Studies into packaging and designing.
iv) Forecasting new uses for existing products
v) Test-Marketing to gauge consumer and trade reaction to the new product.
vi) Research into the development of product line or product range.

(c) Price Research

Focuses on price and include:-

i) Analysis of elasticity of demand to determine sensitivity of

quantity demanded to any changes in prices.

31
 ii) Analysis of costs and contribution of profit margins.
iii) Effects of changes in credit policy on demand so as
to determine the appropriate credit policy.
iv) Customer perceptions of price and quality.

(d) Promotional Research/Communications Research

This focuses on promotional aspects and include:-

i) Analysis of the effectiveness of advertising, sales promotion, Public

Relations and personal selling.
ii) Analysis of the effectiveness of different media, radio, newspapers etc.

(e) Distribution Research

Focuses on distribution and enables marketers to make effective distribution

decisions. It focuses on:-

i) The location and design of distribution centres.

ii) Analysis of the cost of difference methods of transportation and
warehousing.
iii) Analysis of advertising requirements for the dealers. Any organisation
should know how to promotionally assist dealers such as retailers and
wholesalers.

(f) Marketing research also extends to other areas such as:-

i) Studies of corporate responsibility towards the environment and customers

when research should be conducted to determine the role of the
organisation in the society.
ii) Economic forecasting – in terms of interest rates, inflation, exchange rates
etc.
iii) International and export studies – to determine potential of foreign
markets.
iv) Long-term business forecasting where predictions are made on what the
organisation can achieve in the long term for example in 5 years time.

The Marketing Research Process

The marketing research process consists of five stages as shown:-

Defining the - Developing - Collecting – Analysing - Presenting
Problem & the Research Data and Data and Findings
Research Plan Information Information
Objectives

32
STAGE 1

DEFINING THE PROBLEM

An individual marketing project cannot be undertaken successfully until the marketing

problem which management wishes to solve has been clearly and properly defined and
research objectives agreed on. It is important to define the actual problem and not the
symptoms.

A problem well defined will enable collection of the needed information and more
importantly a problem well defined is half-solved. Gathering information about the
wrong problem is a waste if resources.

In defining the problem an organisation prepares a research brief which is presented to

the researcher or research agency.

RESEARCH BRIEF

A Research Brief is a document presented to the researcher and provides the researcher
with information required to carry out the research. The Research brief contains six
headings as follows:-

a) Security

The level of security must be stated. This will ensure that research findings do not
go into wrong hands such as competitors. For example research into new products
development has to be highly secretive. Information about proposed new products
should not go into wrong hands.

b) Objectives

Objectives of any research should be clear and should contain no element of

ambiguity. For example to develop a comprehensive marketing mix for product A
is a clear objective. Such clarity will ensure that a proper job is done.

c) Background

There is need to give background information to enable the researcher to operate

effectively. Background information may relate to the origins of the problem. For
example informing the researcher on any sales and profit trends.

d) Budget

The amount of money that a company can afford for the research project should
be stated. A Research study should be properly funded so as to enable proper
collection of data. Researchers should therefore decide on an adequate budget.

33
e) Time

A research should have a time budget. This enables the researcher to know the
amount of time they are expected to take in undertaking the research. Timely
presentation of research findings and recommendations is therefore important.

f) Other Factors

This looks at any other information that the researcher requires to effectively
carry out the research. Pertinent information should not be kept away from the
researcher.

Constraints on Marketing Research

In undertaking marketing research or commissioning a Research Agency it is important

to understand the marketing Research Constraints known by the acronym CATS.

a) C-Cost Effectiveness

Research requires funding. It is therefore important to justify a research budget

against the benefits the research brings. Benefits of marketing research must
outweigh the costs. Marketing Research should be undertaken when the expected
value of the information to be provided by the research is greater than its
estimated cost.

b) A – Accuracy

Any research must be accurate if it is to be relied upon. Bias and errors must be
minimised if a research is to be reliable. Decisions made should be accurate and
sound hence the need for accurate information.

c) T-Time

Results of any research must be made available for the research to be of value.
Delayed results maybe outdated and may not serve any purpose.

d) S-Security

Confidentially and a high level of security are of great importance in any research.
Access to information by authorised people must be protected and the researcher
must maintain the desired level of security.

34
STAGE 2

DEVELOPING THE RESEARCH PLAN

At this stage an efficient plan to collect the information must be designed. The researcher
prepares a Research Proposal, which among other things addresses the following.

a) Defining the research problems to be solved.

b) Research approaches to be used e.g. observations, experiments, focus groups,
consumer panels, retailer audits, omnibus surveys.
c) Sampling plan – sampling unit, sampling size – sampling procedure.
d) Contact methods – mail, telephone, personal.
e) Costs
f) Confirmation of time budget and submission dates of research report.
g) Data sources to be used, primary or secondary.

STAGE 3

COLLECTING THE INFORMATION

At this stage data and information is collected and this stage is the most expensive.
Collection of data is subjected to problems such as:-

a) Some respondents may not be at home and they must be re-contacted thereby
increasing expenses.
b) Other respondents may refuse to cooperate refusing to answer questions.
c) Respondents may give biased or dishonest answers.

STAGE 4

ANALYSING THE DATA/INFORMATION

When data is collected more analysis is needed to find out how the data can be applied to
marketing problems and decisions. It is at this stage that data is tabulated and pertinent
findings extracted from the data.

STAGE 5

PRESENTING THE FINDINGS

At this stage a report based on the data analysis is presented. Major findings that are
relevant to the major marketing decisions facing management are presented.

The presentation of a report should lead to a marketing decision.

35
SOURCES OF DATA COLLECTION/SOURCES OF MARKETING RESEARCH

The research plan may call for gathering of secondary data, primary data or both
depending on what information is required.

Data – is a range of facts and figures having many possible uses. The central statistical
office provides demographic data. Information refers to processed data that has meaning
For example if sales figures and expenditure are analysed, the information that can be
obtained is that the organisation has made a loss. The sales and expenditure figures are
“data” and the “loss” is the information.

1) Secondary Data

This is data that already exist somewhere, having been collected for another purpose.
Secondary data is neither collected directly by the user nor specifically for the user
and is often collected under conditions that are not well known to the user.

Secondary data provides the starting point for research, as it is easily available and
can be obtained at lower costs.

However if Secondary Data available is incomplete, inaccurate, outdated, unreliable

and cannot solve the problem in question, the researcher will have to collect primary
data. The collection of secondary data for marketing research purposes is also referred
to as Desk Research.

Sources of Secondary Data

a) Internal Sources – Internal sources of secondary data include company profit and
loss statements, balance sheets, sales figures, sales call reports, invoices and prior-
research reports. Such data is not compiled for purposes of research, hence it is
secondary data
b) External Sources - This includes published information from

i) Government Publications – These provide data on economic,

demographic, social and other aspects of the economy and society.
ii) Publications of Trade organisations e.g. ZNCC, CZI – These provide data
on business practices, business and economies trends, economic analysis.
iii) Professional Journals e.g. marketing and sales (I.M.M (S.A) – provide data
on marketing and sales techniques, current information about research in
business particularly marketing areas.

2. Primary Data

This is data collected specifically for the problem at hand. The collection of
primary data is known as Field Research . Primary research is of two kinds.

36
i) Ad hoc Research

This is research that consist of a single survey which conclude the research study.
For example a survey can be carried out to find the percentage of women who
drink alcohol, where they drink, what exactly they drink and how often they
drink. Drinking habits of women can therefore be established and once they are
established the research ends.

ii) Continuos Research

This is research conducted periodically in order to produce regular reports in

certain trends. Continuous Research enables marketers to observe consumers
changing tastes, their buying habits, opinions and brand preferences. Continuous
Research is referred to as tracking study as it keeps track of developments in the
area of research.

Tracking Studies

These are often used where there is need to track (monitor) a marketing situation
before, during and after a research. Tracking Studies monitor changes in markets,
product performance, promotional effectiveness and all marketing programmes.

Uses of Tracking Studies

Tracking studies are used in the following areas:-

i) Tracking on new products from pre to post – Launch to assess acceptance

of the new products.
ii) Monitoring variations of prices in different regions to determine how they
influence demand.
iii) Monitoring promotional effectiveness (pretesting and post testing) so as to
effect appropriate changes.
iv) Tracking of products as they move through the channels of distribution
(wholesalers, retailers).
v) Monitoring changes in consumer behaviour.

Benefits of Tracking Studies

i) Comparative changes can be spotted in the early stages by management

thereby enabling timely action.
ii) Decision makers are always supplied with up-to-date data.
iii) Future actions are designed using information from previous tracking
studies.

37
 iv)Results from tacking studies before, during and after action aids fine-
tuning adjustments to make marketing programmes more effective.
METHODS USED IN THE COLLECTION OF PRIMARY DATA

1. Observations
2. Focus Groups
3. Survey
4. Experiments
5. Retailer/Dealer/Shop Audit
6. Consumer Panels
7. Omnibus Survey (Piggy-backing)

(1) Observation

Data is collected by observing the relevant factors and settings. Observation is

effective because sometimes it is difficult to obtain accurate data by asking
respondents. Observational research maybe used to study consumer behaviour.
For example a researcher may hang around a supermarket to see how consumers
pick certain products and how they react to prices, packages etc. However
observing should not influence the subject’s behaviour e.g. the consumers being
observed.

(2) Focus Group

A gathering of 6 – 10 people who spend a few hours with a skilled interviewer to

discuss a service, project, organisation or other marketing activity. The
respondents speak freely about their feelings, perceptions and attitudes.

(3) Survey

A survey is when investigations are conducted by interviewing. Respondents are

contacted through mail, telephone or in person. A survey is undertaken to learn
more about peoples’ knowledge, benefits, preference, satisfaction/dissatisfactions,
attitudes etc. Types of Surveys that can be used are as follows:-

(a) Mail Survey

A mail questionnaire is used and respondents are requested to complete the

questions. Questions should be simple to understand and easy to follow as the
researcher will not be there to assist. There is low response in a mail survey.

Problems of Mail Questionnaire

Respondents may not complete or return questionnaires as they may not want to
be bothered. A mail questionnaire is characterized by a low response rate.
Respondents do not expand on particular points leading to inadequate responses.

38
b) Telephone Survey

The telephone is used to conduct interviews and it is an effective way of getting

quick answers to simple questions. The telephone survey is associated with high
response rate. It also allows the interviewer to probe and really learn what
Respondent is thinking.

Problems of the Telephone Survey

The telephone is not a desirable method to obtain confidential information.

c) Personal Survey

This is where interviewers personally visit the respondents to interview them. It is

important to ensure that buyers is minimised.

4) Experiments

Refers to a situation where the researcher conducts an experiment e.g. to find the
best advertising campaign, best price level, best incentive scheme etc.

5) Retailer/Dealer/Shop Audit

Retail shops are recruited to participate in the exercise e.g. food stores,
pharmaceuticals, cash and carry shops. A team of Auditors will make regular
visits to the selected panel of retailers to check on actual stock and invoiced
purchases for the period since last count. A retailer audit provides information on
the rate at which goods are moving and such information is used to make
marketing decisions. Every producer know its share and the changes in the market
share between its own market share and competitors market share.

Information categories in a Retailer Audit

In a Retailer Audit the following is revealed.

i) Sales to consumers by product and by brand to determine market share.

ii) Sales to Retailers by product and by brand.
iii) Current stocks by product and by brand to determine stock levels held.
iv) Retail and wholesalers selling prices by product.
v) Percentage of outlets handling the various brands.

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(6) Consumer Panels

A group of consumers is recruited as a permanent panel to provide information on

a continuing basis. Panel members are provided with diaries and each time the
panel member makes a purchase information is recorded i.e. on brands, prices,
sizes, place of purchase etc. The respondent may receive a small payment.

(7) Omnibus Survey (Piggy – backing)

This is where two or more companies join together in a research exercise to share
and lower costs. Research findings are then shared among the companies.

Research Instruments

In collecting Primary data researchers have a choice of two main research instruments
namely the Questionnaire and Mechanical devices.

(a) QUESTIONNAIRE

The use of a questionnaire provides a quick and cheap method of conducting a survey.
The questionnaire suffers from several defects.

(i) Respondents completing the questionnaire may be unaware of the requirements

and may put different interpretations on the questions.
(ii) Respondents may give false/misleading information if they have a desire to give a
favourable impression.

Main points to be kept in mind when designing a questionnaire

a) Keep it as brief as possible

b) Question should be short and unambiguous
c) Where possible use questions that require yes/no answer or use alternatives.
d) No calculations should be required.
e) Personal questions should left until possibly at the end
f) The purpose of survey should be explained and assurances of confidentiality
made.

(b) Mechanical Devices

A Galvanometer can be used in Marketing Research and it measures the strength

of a subject’s interest or emotions aroused by an exposure to a specific advert or
picture. The Galvanometer picks up the minute degree if sweating that
accompanies emotional arousal.

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(a) Qualitative Research

This is research that seeks in depth, open – ended and not yes/no answers by using
open ended questions. Qualitative research allows the respondent to express
his/her own opinions and feelings without any limitations. An example of an
open-ended question is “why do you prefer to use surf? Different respondents can
respond differently by expressing their feelings and opinions to the same question.
The use of Qualitative Research or open-ended questions enables more
information to be revealed.

(b) Quantitative Research

This is research that seeks closed-ended responses by using close-ended

questions. Quantitative Research makes use of Alternative answers and options
for the respondent to choose from. The respondent is guided and constrained and
can not give responses outside the alternatives and options available. An example
of a close-ended question is “why do you buy from OK Stores”? Tick the
appropriate answer

a) Affordable prices
b) Good service
c) It’s a one stop shop
d) There is variety
e) Other…(specify)

In this case the response is structured and one cannot give an answer outside the options
provided. Closed-ended responses can be summarised into percentages and are easier to
interpret and analyse.

Sampling
A sample is a section of the population that is selected for research purposes. A sample is
used because marketers are not able to interview all users of a product as a result of the
limitation of resources and time. For example it is not possible for Coca Cola to interview
all consumers of soft drinks, hence there is need for a sample. Marketers make the
following sampling decisions.

a) Sampling size – This looks at the number of respondents to be selected. The

sample selected should be big enough to represent the views of the entire
population. The larger the sample the greater the likelihood that the sample will
provide an accurate reflection of the population as a whole.

b) Sampling Unit – This refers to who should be selected as respondents. It is

important to have an unbiased sampling unit. For example if a milling company
wants to do research to find out perceptions consumers have towards the
company’s maize meal, they (company) should decide on who to select as
respondents (sampling unit). Both men and women should be selected as

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 respondents as both can cook and have perceptions about the product in question.
In this case selecting females only as respondents will produce biased results.

Sampling Procedures

This looks at how the respondents will be chosen. Usually researchers use Probability
Sampling and Non Probability Sampling methods.

a) Probability Sampling

A probability sample is one selected in such a way that every item in the
population has an equal chance of being included in the sample. There are three
types of Probability Sampling.
i) Simple random sample – Every member of the population has equal
chance of selection and members are selected without using any method.
ii) Stratified random sample – the population is divided into segments or
strata e.g. (age groups, income groups and random samples are drawn
from each group. Stratified sampling eliminates dominance of a particular
demographic group.
iii) Cluster (Area) sample – the population is divided into groups/and areas
such as blocks and the researcher draws a random sample of the group to
interview. Cluster sampling is important because it avoids dominance of a
group of people from one or more areas.

b) Non Probability Sampling

This is when there are no equal chances of being included in the sample, and
when costs or time involved in probability sampling are too high. There are two
types on non probability sampling.

i) Convenience sample – The researcher makes a selection of the most and

easily accessible members of the population from whom to obtain
information. Respondents who are not easily accessible are deliberately
left out.
ii) Judgement Sample – the researcher uses his/her own judgement to select
population members who are perceived to be good prospects for accurate
information e.g. selecting only economists to give information about the
economic situation in Zimbabwe instead of any Zimbabwean irrespective
of what they do.

Summary

The success of any organisation depend on the quality of decisions made and for effective
decisions to be made there is need for information. Marketers make decisions on what
segments to enter, what products to produce, what prices to set, where to distribute, how
to promote and such decisions should be based on information if success is to be

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achieved. It is therefore the role of Marketing Research to provide timely, accurate and
reliable information.

Marketing Research is a component of the Marketing Information System which consist

of other elements such as internal records and marketing intelligence. Marketing
Research is concerned with the activities and subsets such as Product research and
Market Research process consist of five steps namely defining the problem, developing a
research plan, collect data, analyse data and presentation of findings and
recommendations which leads to solution.

Marketing Research can be conducted internally by marketing personnel or externally by

Research Organisations. However in briefing the researcher it is import to point the cost
effectiveness, accuracy, time and security (CATS) desired for the research.

There are two categories of data namely Primary and Secondary data. Secondary data is
data that already exist and the gathering of Secondary data, is referred to as secondary
research or desk research and is the starting point in research as it is time-saving and less
expensive. On the other hand Primary data is data collected specifically for the problem
in question. Primary Research or field research is the collection of primary data. Primary
research is of two kinds namely Ad hoc and continuos research.

The collection of data is done by using several tools or approaches such as observations,
focus groups, surveys, retailer audits, consumer panels, omnibus survey (Piggy-backing)
and many more. Each approach has its own benefits and limitations. In conducting any
research it is not possible to gather data from all the users of a product or service, hence
there is need to take a sample, which is a section of the target group. Researchers should
use a sample that is big enough and whose composition represent the characteristics and
views of the entire target market. Probability sampling and non probability sampling are
two approaches that are used to select respondents.

Conclusively marketing research plays an important role as it ensures gathering of

information, which should be the basis of marketing strategies.

EXAMINATION QUESTIONS

1. (a) Define Marketing Research [2 marks]

(b) What are the costs and benefits of gathering information [8 marks]
(c) Using an example, show how the role of marketing Research helped the decision
taking process. [10 marks]

2.(a) Explain the difference between “ad hoc” research and continuos research
[5 marks]
(b) Describe with examples how continuous research aids management.
[15 marks]

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3.(a) Explain the term tracking study [5 marks]
(b) Describe with examples how a tracking study is conducted
[15 mark]

4.(a) Outline the stage s of the Marketing Research process [5 marks]

(b) Set out the heading of a Marketing Research brief and explain the importance of
each item [15 marks]

5.(a) Distinguish between data information [5 marks]

(b) Select five sources of data and show the information that a Marketing Manager
can extract. [15 marks]

6.(a) Draw a diagram to show the stages in new product development

[5 marks]
(b) Using an example explain the role of marketing research to new product
development. [15 marks]

7.(a) Distinguish between Market Research and Marketing Research. [5 marks]

(b) List and explain 3 different forms of Marketing Research [15 marks]

8.(a) Distinguish between Desk Research and Field Research. [5 marks]

(b) Explain the information that each type of research would provide for a marketing
manager. [15 marks]

9.(a) Explain how a typical retail audit is carried out [5 marks]

(b) Describe how marketing managers use the information obtained [15 marks]

10. Describe 4 different types of research that are part of Marketing Research
[20 marks]

11. Explain the importance of:-

(a) Cost [5 marks]
(b) Accuracy [5 marks]
(c) Time [5 marks]
(d) Security [5 marks]
when briefing a marketing research Agency.

12. Explain with examples each of the following

(a) Open questions [5 marks]

(b) Closed questions [5 marks]
(c) Omnibus Survey [5 marks]
(d) Consumer panels [5 marks]

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(e) Dealer Audits [5 marks]
(f) Qualitative Data [5 marks]
(g) Quantitative Data [5 marks]

13. You have been asked to write a report by your Managing Director, outlining the
methods of market research. You would use in evaluating customers perceptions
and attitudes towards your organisation’s products.

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 CHAPTER SEVEN
CONSUMER /BUYER BEHAVIOUR

Learning objectives

1. Define and explain the importance of Consumer/Buyer Behaviour to marketing

2. Explain the major factors influencing Consumer/Buyer Behaviour.
3. Explain the different motivational factors driving customers and consumers.
4. Describe the consumer decision-making process and explain its relevance to marketing.
5. Explain the decision-making unit (D.M.U) and its importance in marketing.
6. Demonstrate an understanding of the adoption process and its significance in marketing.
7. Demonstrate an understanding of the diffusion process and its marketing implications.

Introduction
Success in the formulation and implementation of marketing programmes can only be
achieved when marketers analyse and understand consumer behaviour in terms of
purchase decisions and consumption patterns of consumers. The way consumers behave
determines the marketing mix to be put in place.

Definition

Consumer Behaviour is defined as the behaviour or acts consumers display in searching

for, purchasing, using, evaluating and disposing of products and services they expect will
satisfy their needs and wants. In studying consumer behaviour marketers try to find how
consumers make their buying decision and identify factors that influence these decisions.

As marketers study consumer behaviour they want answers to questions such as what do
consumers buy? Where do they buy? Why do they buy? When do they buy? And such an
insight becomes the basis of marketing strategies (Marketing mix). Knowledge of how
consumers behave helps marketers to implement the marketing concept.

Consumer Behaviour and the Marketing Concept

The Marketing concept is a consumer oriented philosophy which states that for success to
be achieved the organisation should identify needs and wants of target markets and
deliver the desired satisfaction better than competitors.

Under the marketing concept the organisation adopts “the customer is king attitude” and
managers orientates all company efforts, planning, policies and operations towards the
customer. Central to the marketing concept is the notion of Customer satisfaction and
for customer satisfaction to be achieved, it is imperative to understand consumers through

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Consumer Behaviour Studies.

Studying consumer behaviour becomes an absolute necessity if an organisation is to

survive. More importantly when an organisation adopts the marketing concept as a
guiding principle, they should study consumer behaviour.

The bottom line is that the marketing concept have given rise to the studies of consumer
behaviour, or putting it simply, the studies of consumer behaviour are deeply rooted in
the marketing concept.

Marketing Implication of Consumer Behaviour

The marketing implication of consumer behaviour are that when marketers study and
understand consumer behaviour, they are able to develop tailored marketing programmes
which meet the requirements of specific target markets. Equipped with the knowledge of
how consumers behave markets are able to:

a) Produce the right products whose sizes, shapes, designs, styles, packages, colour
and quality are to the expectations of The consumers. Because of the knowledge
of Consumer Behaviour Coca-Cola (Pvt.) LTD produce different types of soft
drinks with different packages (glass, plastic and the cane).

b) Price products to the expectations of the target markets. When an Organisation

has knowledge about consumer behaviour it is able to formulate pricing policies
that suit customers. The same Television set at T.V.Sales and Hire will have two
prices: one for those who buy on cash and the other for those who buy on credit.

c) Distribute products to the outlets that consumers patronise. Products from

National Foods are distributed through Born Marché, OK Bazaars, T.M. Stores,
Jarzin Supermarkets etc as consumers prefer different outlets. It is because of
consumer behaviour knowledge that effective distribution is achieved.

d) Promote products through the media that consumers use. When Marketers
understand consumer behaviour they can communicate to consumers using the
media that consumers use. Adverts of Vaseline Blue Seal are found in magazines,
daily newspapers, television and radio.

e) Evaluate marketing opportunities. As marketers analyse and understand consumer

behaviour of different consumers they are able to assess, analyse and evaluate the
attractiveness of the opportunities that arise. In understanding the buyer behaviour
of the youths and adults marketers can compare the different opportunities
created.

f) Segment markets (selecting the most attractive segments) and position (placing
products/services in unoccupied positions in the mind of the consumers). It is
through understanding consumer behaviour that marketers are able to subdivide

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 the market into distinct subsets, select the most promising segments and position
products/services in viable and sustainable positions.

Major factors influencing consumer behaviour

It is important for marketers to understand what influences purchase decisions and

consumption patterns that consumers display. The major influences are illustrated in the
table below.

Cultural Social Personal Psychological

Culture Reference groups Age and Life cycle Motivation

Subculture Family Occupation Perception

Social Class Roles and statuses Economic Learning

Circumstances
Life Style Attitudes

Personality

1. Cultural Factors

a) Culture
Culture is defined as the sum total of learned behaviour traits, beliefs, customs
and values that serve to regulate the consumer behaviour of members of particular
society. The implication of culture is that the way consumers views the world,
what they value most, what they believe in and how they act differ according to
their cultural backgrounds. Culture shape consumption patterns and choices of
consumers, Hence marketers should know the specific cultures of their target
markets in order to produce products and use symbols that are acceptable.

(b) Sub-culture
Each culture contains subgroups on subcultures, which are groups of people with
shared value systems based on common life experiences and situations. Different
nationality groups (Irish, polish, Italians), racial groups (coloureds, blacks and
whites), religious groups (Jews, Islam, Christianity) and Geographical groups,
(Manicaland, Matebeleland, Mashonaland) have distinct tastes and preferences,
interests, taboos, attitudes and lifestyles. Subcultures are definable segments and
marketing programmes can be designed to suit specific subcultures.

c) Social Class
A social class is defined as the division of members of a society into a hierarchy
of distinct status classes so that each class have relatively the same status and
members of all other classes have relatively the same status. Social classes are

48
 measured in terms of income, education, occupation and other variables. One’s
social class has influence on what one buys, where they buy, how they buy and
when they buy. Marketers are interested in social classes because they are market
segments where product usage can be related to social class membership. For
example the Mercedes Benz and the Mitsubishi Pajero vehicles are purchased by
those in the upper class. Marketers are also able to tailor produce goods and
services, tailor price, tailor distribute and tailor promote to meet the needs and
interests of different social classes. For example CIMAS offers different medical
aid schemes for different social classes. The different medical aid schemes for
different social classes are basic, primary, private, Medexec.

Some of the reasons why marketers should develop different marketing programmes for
different social classes include:-

a) Social classes show distinct product and brand choice in areas such as clothing,
furniture, leisure activities, food and vehicles
b) Social classes show differences in media exposure. High class consumers have
greater exposure to satellite dishes, high quality and expensive newspapers and
magazines.
c) Social classes also differ in television program preference lower class consumers
arguably prefer more of local television programs, local drama whilst higher class
consumers prefer foreign programmes such as Beverly Hills.

The different social classes are as follows:-

a) The upper upper class

b) The upper lower class
c) The upper middle class
c) The lower middle class
d) The upper lower class
e) The lower lower class

2. SOCIAL FACTORS

Consumer Behaviour (what one buys, where they buy, how they use products and
services) is influenced by social factors such as reference groups, opinion leaders and
family.

a) Reference Groups
A reference group is any person or group that serves as a point of comparison or
reference for an individual in forming either general or specific values, attitudes
or behaviour. Marketers should understand the impact of other people on
individual consumption choices, patterns, attitudes and behaviour.
References groups encourage conformity and marketers use reference groups as
they make individuals aware of a product or service by providing information,
assist the individual in evaluating the product/service and legitimise and

49
 individual’s decision to use the same product/service as the reference group.
Reference groups are effective because of the perceptions that consumers have
about the reference groups. For example “what has been used by the reference
group is good and should work for them too.” Because of such perceptions
marketers make use of the reference group concept in promotions. For example in
advertising, marketers use celebrity appeals as many consumers would imagine to
live the life of celebrities such as Simon Chimbetu, Oliver Mutukudzi, Kelvin
Sifelani, Patrick Kariwo, Patricia Mabviko, Peter Ndlovu and international
celebrities such as Ronaldo, Naomi Campbell have been used in promoting
products, services and ideas.

(b) Opinion Leaders

Opinion Leadership refers to the process by which one person (the opinion leader)
informally influences the actions or attitudes of others, who may be opinion
seekers or merely opinion recipients. Marketers should figure out how to reach an
opinion leader in the relevant reference groups and direct messages at them.
Friends, colleagues and neighbours can be opinion leaders.

(c) Family

One’s family influences one’s consumption and buying Behaviour. Members of a

buyer’s or consumer’s family can exercise a strong influence on the buyer’s
behaviour. Some of the brands we use today are a result of family members who
have influenced us. For example the Surf advert which features Mbuya Mlambo
and her elder daughter illustrates the impact of family members and how they
influence transfer of brand usage from one generation to the other. Marketers are
particularly interested in the roles and influences of the husband, wife and
children in the purchase of different products and services. This is important as
marketers will direct their messages to the right person. Imagine the Radio LTD
Advert where a child says “Daddy it’s high time we go to Radio LTD”

3. Personal Factors

The consumer/buyer behaviour of an individual is influenced by their personal

factors such as age, life cycle stage, occupation, economic situation, personality
and self concept.

a) Age

People’s tastes and preferences are age related and people change the goods and
services they consume because of age. Age therefore influences the consumer
behaviour and marketers should have knowledge about this.

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b) Family Life Cycle Stage

This refers to the stages through which people pass from singlehood to
dissolution. The stage at which one is in the family life cycle influences one’s
buyer behaviour hence marketers can segment markets (families). The different
stages in the family life cycle are:-

STAGE 1

Bachelorhood

This refers to young adults (men and women who reside away from parents). They spend
their income on leisure activities, entertainment, rent, and furniture. Young adults are a
lucrative market for entertainment Clubs, sports clubs, travel agents, healthy products etc.

STAGE 2

Honeymooners

Honeymoon stage starts after marriage. Honeymooners are interested in new homes,
furniture and are desirable candidate’s for new products/services.

STAGE 3

Parenthood

At this stage, the family have children and the stage spans over 20 years, spending
patterns of the family change as they feel financially squeezed because of child rearing
and educational expenses.

STAGE 4

Post Parenthood

At this stage parents are left alone as the grown up children leave home to live on their
own. Parents in the post parenthood feel better financially and are targets for luxurious
and expensive products.

STAGE 5

Dissolution

At this stage one spouse survives (normally the wife) and the other dies. The surviving
spouse becomes more economic in spending patterns, health deteriorates and there is
special need for attention, affection and security.

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c) Occupation

One’s occupation affect one’s consumer behaviour and influences goods and
services purchased. When marketers know the impact of occupation on consumer
behaviour they are able to formulate appropriate marketing programmes.

d) Economic situation

Consumer’s economic situation in terms of enough disposable income, savings or

borrowing power will affect his/her buyer behaviour. Marketers should monitor
trends in interest rates, personal disposable incomes and savings so as to
formulate a Marketing mix that is acceptable.

e) Lifestyles

Marketers should understand lifestyles of consumers, which are expressed in the

activities, and interests of consumers. Knowing life styles of consumers helps
marketers to understand changing consumer values and how they affect buying
behaviour.

f) Personality

Personality is defined as those inner psychological characteristics that both

determine and reflect how a person responds to his or her environment. In simple
terms, one’s personality refers to those attributes, qualities, factors, traits and
mannerisms that distinguish one individual from others. Marketers should
understand personality because one’s product or dealer choice and how one
responds to the promotional efforts is influenced and determined by his/her
personality. Some of the personality characteristics are self-confidence,
sociability, aggressiveness, compliance, gentleness and detached. For example
products can be produced and described as “gentle soap”. Marketers will then
formulate suitable adverts bringing out this personality characteristic (gentleness)
and appeal to those with such a personality or those who subscribe to it.

4. Psychological factors

Psychological factors are influences within an individual that influence one’s

buyer behaviour. The psychological influences are:-

a) Motivation
b) Perception
c) Learning
d) Attitudes and beliefs.

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a) Motivation

A motive is that which moves an individual and that which makes an individual
sustain a certain behaviour. Needs and goals are the basic forces that motivate a
person to do something. When a need is not addressed this leads to a drive which
is a strong stimulus that encourages action to reduce a need. Dr Abraham Maslow
a Psychologist viewed human motivation as a hierarchy of five needs ranging
from the (most pressing) physiological needs to the (least pressing) highest needs
for self-actualization. According to Maslow individuals will be motivated to fulfill
the most powerful needs for them at a given time.

Each need must be partially satisfied before the individual desires to satisfy a need
at the next level. Maslow’s hierarchy of needs is important to marketers because
it help explain why consumers buy. Knowledge about consumer needs and
motives enables marketers to formulate appropriate and effective marketing
strategies and tactics. The Maslow’s hierarchy of needs is illustrated in the
diagram.

Self actualization
needs, fun,
freedom, Education, hobbies
Esteem needs
Status, Recognition
Social needs
Love. Affection, Friendship family
Safety and security needs
Protection and security, insurance, pension
Physiological needs
Food, Clothing Shelter

b) Perception

Perception is the process by which people gather and interpret information from
the world around them. The way individuals perceive stimuli vary from one
person to another because of the following perceptual processes.

i) Selective Exposure

One’s eyes and mind seek out and notice only information that interest them. As
consumers select what to pay attention to, marketers should ensure that the

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 message in the advert is clear, stands out among the rest resulting in the attention
of the consumer being captured.

ii) Selective Perception

As consumer’s are exposed to various stimuli they screen out or modify ideas,
messages and information that conflict with previously learned attitude and
beliefs.

iii) Selective Retention

As consumers are exposed to various stimuli they only remember or retain what
they want to remember or remember information that supports their attitudes and
beliefs rather than challenge their pre-conceptions.

c) Learning

Learning is defined as a relative change in behaviour occurring as a result of

experience. Consumer learning is the process through which individuals acquire
the consumption knowledge and experience they apply to future related
behaviour. The way consumers learn is of great importance to marketers who
want to know how consumers learn about products and services. An
understanding of how consumers acquire knowledge about the organisations
goods and services is important in the formulation of effective marketing
programmes. However for Learning to occur certain basic elements must be
present namely.

i) Motive

A motive is that which moves one into action. Marketers should uncover
consumer motives so as to be able to teach consumers why and how their products
or services will best fulfill consumer needs. For example the motive behind taking
a particular soft drink may be to get refreshed.

ii) Cues

A cue is a stimuli that give direction to motives. Price, sign, advert, package and
displays are cues that help consumers fulfill their needs in product specific areas.
Using the soft-drink example an advert that describes how “refreshingly different”
a soft drink is, will be a cue that give direction to the consumer. Marketers should
therefore provide cues that meet consumer expectations, for consumers to learn.

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iii) Response

A response is an effort to satisfy a drive or motive and the response, one makes
depends on previous learning or experience. In the soft drink example when one
receives information through the advert one can respond by trying the soft drink.

iv) Reinforcement

Reinforcement refers to anything that follows a response and increases the

tendency for the response to reoccur in a similar situation. For example if one tries
the soft drink and find the experience rewarding the consumers’ response is
reinforced positively. The consumer will have learned that by taking a particular
soft drink, their needs will be satisfied.

d) Attitudes and Beliefs

Attitude is a learned pre-disposition to respond favourably or unfavourably to a

given object. In simple terms an attitude is a person’s point of view
towards something. Marketers should understand attitudes of consumers, how
they are formed and how they change because such attitudes influence the
selective process, learning and the buying decisions consumers make. Beliefs that
consumers have on products and services make up product and brand images.
Marketers should correct wrong beliefs through advertising campaigns.

Buyer Decision Making Process

Marketers should understand the consumer decision-making process so as to be able to

influence consumers. The buyer decision process consist of five stages which are
illustrated in the diagram.

Need Information Evaluation Purchase Post

Problem Search of decision Purchase
Recognition Alternatives

1) Problem Recognition/Need Recognition

A consumer recognises a problem or a need when he or she senses a difference

between his or her actual state and the desired state. For example a young lady
may desire to have a smooth skin but the actual situation or state is that she has a
rough skin. The lady recognises a problem and she requires a bath soap that gives
her the smooth skin. Marketers should determine what triggers problem
recognition and should identify the stimuli that often triggers interest in the
product category and develop effective Marketing programmes which capitalize
on the stimuli. Positioning is therefore determined by what triggers interest in the
product category. For example when marketers, through research knows that what

55
 triggers interest in a bath soap is its ability to provide a smooth skin then they are
able to position their brand as “the one that gives you the smooth skin”

2) Information Search

At this stage the consumer searches for information bearing on the need. The lady
in our example will search for information on which bath soap could give her the
smooth skin. Consumers look for information from personal sources such as
friends, family, neighbours, colleagues, commercial sources such as advertising,
salesperson, dealers, displays and other information sources such as
experimenting with the product. The search for information stage is important to
marketers who should identify the target group’s source of information and
disseminate information. In giving information marketers should point out the
unique selling proposition (U.S.P) of the brand so as to appeal to the consumer.
U.S.P refers to a benefit, which is a distinct advantage your customers cannot get
from a competitor.

3) Evaluation

At this stage the consumer compares information about the various brands. In our
example the lady may compare Lux, Protex and Palmolive to know where each
brand stands on the attributes connected to her needs. As consumers compare
brands, marketers should point out those attributes the consumer will be looking
for and this will influence the consumer to select the marketers brand.

4) Purchase Decision

At this stage the consumer selects the brand rated the best and purchase it. In our
example the lady may purchase Lux soap. Fast moving consumer goods (FMCG)
are normally purchases on cash unlike other products, which may be purchased
differently. In this regard marketers should know how consumers buy. Knowing
how purchases are made will enable the marketers to develop appropriate credit
e.g. lay-bye, zero deposit schemes etc.

5) Post Purchase

After making a purchase and having used the product, the consumer will re-
evaluate the decision and action to select a certain brand. If the brand matched
consumer expectations in terms of its performance, this results in cognitive
consonance a state of satisfaction. If the brand can not meet consumer
expectations this leads to cognitive dissonance, dissatisfaction or discomfort that
occurs when one makes a purchase.

In our example the lady will assess whether Lux is providing the expected results.
However marketers should not exaggerate product performance when advertising,

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 but should make product claims that represent the product’s likely performance so
as to achieve customer satisfaction. When a customer is satisfied he or she
becomes the best advertisement and more importantly a satisfied customer buys
today, tomorrow and forever. Marketers should establish post-purchase
communications to the buyer.

The After Market

The after market consists of all post-sale efforts to satisfy customers and if possible
secure regular or repeat purchases and this will lead to on-going and long term profits.
Marketers recognize that long term profits can only be achieved through long term
customer relationships, which are achieved through the After Market. The marketers
interest in the sale should not end when the order is delivered or when it is paid for, but
importantly the marketer should make efforts to ensure that the consumer derives
maximum satisfaction from the purchase. After the market techniques include facilities
such as:-

i) After – Sales Service

Marketers should make available servicing and repair facilities to products such as
motor vehicle and other machinery to enhance customer satisfaction. Marketers
should arrange for service depots or agents who can provide servicing. Such
arrangements will ensure fast repairs.

2) Manuals and Instructions

The availability of manuals and instructions enables the customer to easily

understand how to use the product to maximum use. Explanatory leaflets can also
be used to provide market education. Easy use of a product leads to customer
dissatisfaction.

3) Deliveries and Installation

Marketers should not promise deliveries and installation unless the promise will
be honoured. Regular and reliable deliveries can offer competitive advantages
over competitors. Installation of the product is also of paramount importance.

4) Refunds and Exchanges

At times customers make wrong purchases only to return the products on another
day. Marketers should be willing to refund or exchange and this creates goodwill
with customers.

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5) Product Recall

Marketers should be in a position to recall faulty products quickly and reassure

customer. This demonstrates that the marketers cares a lot about the customer and
is not just interested in the sale.

Decision Making Unit (D.M.U)

The Decision-Making Unit refers to a situation when the buying decision process consists
of more that one person. All the people involved in making the decision make up the
Decision Making Unit. Marketers should identify and understand the roles in the D.M.U
and needs and expectations of members of the D.M.U.

Such an insight will enable marketers to design the product and develop effective
promotional tactics. The elements in the Decision Making Unit (D.M.U) are as follows:-

S- Starter – This refers to a person or thing which triggers a purchase. In any buying
situation someone or something suggests the idea of buying the particular product
or service. For example children may trigger the purchase of a television set.

P- Purchaser – The person who actually buys the product or service. The Purchaser
does not make any decision but simply buys as instructed. In our television
example the eldest child maybe the purchaser.

A- Adviser – This refers to a person who gives advice or recommendation on what

product or service to buy. A sales representative, friend, neighbour or colleague
may be an adviser.

D- Decider – The person who makes the decision on what to purchase, where and
how to purchase it. The decider is normally one who has financial authority or
power to dictate the final choice. In our television example the father may be the
decider.
E- End –user – This refers to the person or people who uses the product of service.
In our television example, end users are members of the entire family.

F- Finance – The money or credit that allows the purchase to be made.

The Adoption Process

The adoption process refers to the mental process through which an individual passes
from first hearing about an innovation (new product) to final adoption. The stages are as
follows:-

i) Awareness – This is where the consumer is exposed to the innovation but does
not have much information about it. For example a consumer becomes aware of
the New Zambezi Lite lager.

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ii) Interest – The consumer develops an interest and searches for more information
about how the innovation can benefit him or her. In our new Zambezi Lite lager
example, the consumer, seeks information about how it tastes, its price and
alcohol content.

iii) Trial – At this stage the consumer uses the product on trial basis to determine the
utilises of the product. In our example the Consumer tries Zambezi Lite to
determine its taste and see whether it can satisfy the consumer.

iv) Evaluation – At this stage the consumer evaluates and assesses the performance
of the innovation. The consumer will assess whether the performance of the
product will meet the expectations of the consumer. In our example the consumer
will assess performance of Zambezi Lite and compare it with another brand the
consumer has been taking.

v) Adoption/Rejection - If results of the assessment of the trial purchase are

positive the consumer will adopt the innovation that is accept regular use of it. If
the innovation can not meet the expectations of the consumer, he/she rejects it.

Marketing implication of the adoption process

When marketers understand the stage at which consumers are in the adoption process,
then they are able to persuade consumers to the ultimate acceptance of new product. This
is important because if consumers are not persuaded into accepting the innovation, they
will continue to use their established brands.

Knowledge about the adoption process will enable marketers to use the appropriate
promotional tools. For example in the early phases of awareness and interest, advertising
plays an important role as eye-catching and exciting adverts create awareness and
generate interest among consumers. On trial sales promotions will play a critical role as
consumers are induced and enticed into trying the new product. On evaluation personal
selling which enable more objective presentation of the information to the consumer,
should therefore be used on establishing conviction in the mind of the consumer and
provides reassurance to the consumer.

Adopter Categories

Early Majority
Late majority
Early
Adopters

Innovators Laggards

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The Diffusion is concerned with how new products or innovation spread or diffuses in the
market. As a new product is introduced in the market, not all consumers move through
the adoption process at the same time. Essentially it means the innovation is not adopted
by all consumers at the same time hence there are adopter categories as illustrated in the
diagram classifications scheme which shows five distinct consumers in terms of where
the consumers stand in accepting the innovation.

i) Innovators - These constitute 2 ½ % of the market and are those adventurous

and risk takers type of customers who immediately try a new product or model as
soon as it appears on the market.

ii) Early Adopters – They constitute 13.5% of the market and are often opinion
leaders who adopt new products, readily, but only after careful consideration.

iii) Early majority – These constitute 34% of the market, weigh risks carefully and
accept an innovation before an average person.

iv) Late majority – These constitute 34% of the market and are skeptical consumers
who take their time before commitment to a new product. They may adopt a
product as a result of peer pressure and when they are satisfied that the new
product is well tried and is reliable.

v) Laggards - These constitute 16% of the market and are the last to try an
innovation. The laggards tend to be older, traditionally oriented to the past and
suspicious of the new.

Marketing Implications of the Diffusion of Innovation Process

When marketers understand the diffusion process they are able to formulate effective
marketing plans. When marketers know that only 2.5% of the market will adopt the
product in the early stages, it means initial demand of the innovation is low, hence
management should not produce on big scale.

As opinion leaders (those who influence others) are most likely to be among the buyers,
their opinions and perceptions about the performance of the innovation are very
important, hence there is need to produce a good quality product with good features and
performance for the opinion leaders to talk favorably about the innovation. Distribution
will also have to be selective in the early stages and then intensive as more people adopt
it. Appropriate pricing and promotional strategies can also be formulated depending on
consumer standing on the adopter categories.

Summary

Understanding consumers is key to the success of any organisation. Effective marketing

programmes can only be put in place when marketers understand consumer behaviour i.e.
the acts displayed in buying goods and services.

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The implication of consumer behaviour is that it determines the marketing mix to be
adopted by the organisation. In consumer behaviour marketers should also understand the
major factors that influence consumer decisions. These are the cultural, social, personal
and psychological factors, which shape and mould consumer choices and consumption
patterns. An understanding of these factors and how they affect consumers will enable
marketers to put in place an offer that appeals to the consumers.

Of great importance in consumer behaviour is the decision making process. An insight in

the buyer decision making process will assist marketing management in making
decisions and more importantly such and insight will enable the marketer to influence the
consumer at each stage of the buyer decision process.

The after-market provides marketing with an opportunity to secure repeat purchases as

the after market techniques enhances customer satisfaction. If done properly after-market
can bring about a competitive edge over competitors.

The decision making unit (D.M.U) also plays a role in the purchase decisions consumer
make. Marketers should understand the key players in the decision making unit and the
different roles they play. Such an insight will go a long way in assisting marketers to
formulate strategies and tactics of dealing with the key players in the D.M.U.

New products come on the market and marketing should know how consumers make a
decision to accept or reject the new product. As the new product is introduced in the
market it spreads through what is called the Diffusion process and there are adopter
categories that accept the innovation at different times. The diffusion process and the
adopter categories have major implications in marketing planning, production and all
elements of the marketing mix.

Conclusively consumer behaviour is an absolute necessity as it equips marketers with the

knowledge of the customer, the most important person in any organisation. Knowledge
about how that person behaves, becomes the proper ammunition to effectively deal with
the consumer. In addition it is through consumer behaviour studies that specific needs of
consumers are identified.

EXAMINATION QUESTIONS

1 (a) Draw a model to illustrate the stages of new product

adoption (5 marks)

(b) Use the model to explain how marketing managers plan a successful new product
launch (15 marks)

2 (a) Explain the after-market (5 marks)

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 (b) Give three examples of after market care to show why it is important to an
organisation (15 marks)

3 Cognitive dissonance is a term used to describe a consumers possible reaction

after purchase.

(a) Show why a person may react badly after making a purchase (10 marks)

(b) Explain how Cognitive Dissonance can be reduced or eliminated by good after-
market (10 marks)

4. Explain with example each of the following

(a) Customer (5 marks)

(b) Consumer (5 marks)
(c) Decision-Making Unit D.M.U (5 marks)
(d) Maslow’s hierarchy of needs (5 marks)

5(a) Draw a diagram of the Decision Making Process (D.M.P) (8 marks).

(b) Use 2 examples to show how knowledge of this process can help a Manager to
make better and quicker decision at work. (12 marks)

6 (a) List and explain the roles in consumer Decision Making Unit
(D.M.U) 10 Marks (10 marks)
(c) Describe the importance of understanding these roles to a sales person selling
motor cars from a high street showroom (10 marks)

7(a) Draw a diagram to show the consumer adoption process (8 marks)

(b) Explain how understanding this process assists Marketing planning. (12 marks)

8. You have been asked to give a 30 minute talk to final Year business students.
They particularly want to know the difference between selling in the fast moving
consumers goods (FMCG) markets and selling in the Industrial markets.

(a) Describe the characteristics of each market (10 marks)

(b) Clearly set out the differences between the selling role in each (10 marks)

9(a) What are the motivational factors that drive customer and consumers?(10 marks)
(b) Why must marketers pay particular attention to ethical considerations when
developing a promotional strategy. (10 marks)

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 CHAPTER EIGHT
MARKET SEGMENTATION AND POSITIONING

Learning Objectives:

After completing this chapter you should be able to:-

1. Explain segmentation and why markets should be segmented.

2. Explain the benefits of segmenting markets

3. Describe the criteria for effective segmentation

4. Explain the basis for segmenting markets

5. Describe the relationship between segmentation, targeting and positioning and

show how the concepts can be used in a practical situation

6. Draw a positioning matrix and show how marketers can use it.

INTRODUCTION

Consumers are different in terms of their tastes and preferences, value, beliefs,
perceptions, attitudes, culture, social, class, sex, motives, incomes etc. Such consumer,
diversity makes it difficult for marketers to satisfy consumers hence there is need to break
the market into several homogenous manageable portions. Segmentation is based on the
recognition that every market consists of potential buyers with different needs and
different buying behaviour.

The different consumer attitudes may be grouped into segments and a different
marketing approach (marketing mix) will be used for each market segment. It can
therefore be said that the rationale of market segmentation and the subsequent provision
of a unique marketing mix for each targeted segment is that customers are different.

Definition

Market segmentation is defined as the process of dividing a potential market into distinct
subsets of consumers with common needs of characteristics and selecting one or more
segments to target with a distinct marketing mix.

Market Segmentation and the Marketing Concept

The studies of market segmentation are deeply rooted in the marketing concept which is a
consumer oriented philosophy which states that needs and wants of target markets should

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be satisfied better than competitors. On the other hand segmentation is used to discover
the needs and wants of specific groups of consumers so that specialised goods and
services are tailored to suit and satisfy each group’s need. In simple terms segmentation
helps to implement the marketing concept.

Benefits of Market Segmentation

a) It enables marketers to choose the most profitable target segments and to come up
with the best marketing mix to apply in that segment.
b) It enable marketers to design specific products for different customers, thereby
enabling the organisation to closely meet the needs of different customers.
c) Segmentation results in higher customer satisfaction and this results in higher
sales and higher profits.
d) Segmentation enables effective and efficient use of resources, as marketers will
know characteristics and size of the segments.
e) The organisation can try to dominate particular segments, thus gaining
competitive advantages.

Segmentation Criteria

It is important for an organisation to identify a segment or segments from which

profitable business can be made. For a segment to be identified and selected it should
meet certain criteria and the main criteria used to identify a variable market segment are:-

a) Identifiability

The segmentation process should differentiate meaningfully between sets of

buyers and should be able to identify differences in market demand patterns. In
simple terms the company must be able to identify a segment with common
characteristics DELTA CORPORATION identified groups of Alcohol drinkers
and then established National Breweries for clear beer and Chibuku Breweries for
opaque making it possible to meet the different needs of the alcohol market.

b) Recognisability

The Segment should be recognisable both by the organisation serving it and by

the customers being pursued. Unique and distinct characteristics make the
segment recognisable.

c) Sufficiency/Substantially

Segments should be of an adequate size or large enough to provide the

organisation with desired return for its efforts. Markets or segments should be
substantial for them to be pursued. Revenue obtained from selling in a segment
should offset the total cost involved in selling that segment.

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d) Accessibility

Marketers must be able to reach the market segment they wish to target in an
economical way. Certain segments cannot be reached because the infrastructure of
road, rail and air is not yet sufficiently developed to access the segments.

e) Stability

For a segment to be considered a worthwhile segment it should be politically,

economically and socially stable. Information about the foregoing should be
known before a segment is entered. Demographics of the segment should also be
stable for them to be relied on.

f) Measurability

An organisation should be able to gauge and assess the size of the segment and
the type of products needed. This should be done before, during and after entry.

g) Sustainability

A segment should continue to grow for it to be considered a worth while segment.

Before entering a segment an organisation should consider how sustainable a
segment is. It is costly and risky for an organisation to enter a segment that is
unsustainable.

Basis for segmenting Consumer Markets

Markets can be subdivided or broken into several manageable portions using various
ways known as the basis for segmentation. In consumer markets the following
segmentation variables are used.

a) Demographic Segmentation

Under demographic segmentation a market is subdivided on the basis of

demographic groupings such as age, gender, religion, race, language, marital
status, and occupation or family size. Although demographics are mostly used,
they ignore fundamental differences that exist within each segment. For example
all teenagers between 15 and 17 years do not have the same needs, attitudes,
characteristics and motives.

b) Geographic Segmentation

Markets can also be subdivided on the basis of geographic units such as climate,
regions, cities, nations, and continents or population density. The theory behind
geographic segmentation is that people who live in the same area have similar

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 needs and wants which differ from those of people in other areas. Marketing
programs (Marketing Mix) can therefore be tailored to suit needs of consumers in
different geographic areas.

c) Geodemographic Segmentation

This is based on the recognition that the neighborhood area (geographic) in which
one lives will reflect in one’s professional status, income, education, life stage and
behaviour (demographic). In simple terms Geo-demographic segmentation is
based on the assumptions that people who live next to one another have similar
financial means, incomes, tastes and preferences, lifestyles and consumption
habits. However the assumption that the house holds in similar neighborhood
areas have similar purchase behaviour does not always apply as mixed
neighborhoods may exist. For example even though Dzivarasekwa is regarded as
a location of low income households there are others with very big and beautiful
houses in that area and you could mistaken them with those in Borrowdale,
Bluffhill etc. Geodemographic segmentation use of techniques such as:

 ACORN (A Classification of Residential Neighborhood)

Where residents are classified into different groups. ACORN can assist the Marketing
Manager to determine suitable locations for retail stores and determining sales
territories.

 Mosaic
A standard classification used for packaging goods for grocery retailing or door to do
distribution.

 Postcodes or pinpoint
Postcodes are postal areas that can highlight the limits of a customer’s specific street.
When customers purchase products over the phone or mail they can quote their
postcode thereby making it easy to check their identity.

d) Socio-cultural segmentation
This is where the market is subdivided on the basis of sociological and cultural
factors, family life cycle, social class, core-cultural values and sub-cultural
membership

 Social Class

Members of a society are divided into a hierarchy of distinct status classes called
social classes. Members of each class have either more or less status. Markets can
therefore be segmented on the basis of social classes as consumers in different social
classes show distinct product and brand preferences.

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 Culture and Sub-Culture

Cultural values and beliefs shape consumption patterns and choices. Markets can be
segmented on the basis of culture as members of the same culture share same values,
beliefs and customs. Although cultural segmentation is used in domestic markets it is
mostly used in international markets as different countries have different cultures.
Sub-cultures are subgroups of people within the larger culture with shared value
systems based on common life experiences and situations. Because subgroups have
distinct taste preferences, lifestyles and interests they are a basis for segmenting
consumer markets.

e) Use – Related segmentation (How the product is used)

The use-related segmentation technique subdivides markets in terms of usage

characteristics such as usage rate, and degree of loyalty. Consumers use products
at different rates hence they can be grouped into heavy users, light users and
medium users. Marketers can also segment the market on the basis of the degree
of loyalty to a brand, store, company and service. Preferential treatment and
effective promotional efforts can be developed for customers with different
degrees of loyalty. Beverly Building Society has the Banking Hall and the Red
Door Club to cater for different segments of customers.

f) Usage – situation segmentation (when and where the product is used)

An occasion or situation determines what a customer will purchase or consume.

As consumers behave differently on certain situations and occasion, usage
situation becomes a segmentation variable. For example consumers buy flowers,
greeting cards and cakes for different occasions. Effective marketing programmes
can therefore be formulated to suit usage situation or occasions.

g) Benefit segmentation

Consumers seek different benefits from a product or service and marketers subdivide a
potential market on the basis of the benefits that consumers look for in a product. For
example in the toothpaste market consumers look for different benefits such as decay
prevention, bright teeth and fresh breath. Marketers can therefore develop and position
toothpaste to suit the specific segments.

Market Targeting

Organisations are always faced with competition, limited financial and material resources
and large markets thereby making it difficult to sell to the entire market. Marketers
should therefore select target markets to serve. The act of evaluating and selecting one or
more specific groups to serve is called market targeting. Having identified the most
promising segments marketers should select a market coverage strategy which assist the

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organisation to choose how many segments to serve. The following market coverage
strategies are options that marketers can make use of.

a) Undifferentiated Marketing Strategy

When an organisation adopts this strategy, it ignores market segment differences

and goes after the whole market without meeting specific needs of specific
segments. It relies heavily on mass product, mass production, mass distribution,
mass advertising and hopes to get as many buyers to buy the product. It is suitable
under conditions of monopoly or where demand exceeds supply. Undifferentiated
marketing strategy is not sensitive to the needs. In modern business,
undifferentiated marketing strategy is no longer useful.

b) Differentiated Marketing Strategy

This strategy enables the organisation to formulate different offers (Marketing

Mix) each aimed at different groups of potential customers at several market
segments. With this strategy specific needs of specific segments are therefore met.
For example Olivine Industries produces different bar soaps and bath soaps for
different segments.

c) Concentrated Marketing Strategy

With this strategy the company concentrates and focuses on a small portion or
segment of the total market. The organisation therefore produces
the ideal product for a single segment. For example in the automobile market
ZIMOCO (Pvt.) Ltd has produced the Mercedes Benz for the Upper Upper Class
segment (Luxurious segment).

There is no Mercedes Benz for the lower class or middle class. Concentrated
Marketing strategy enables the organisation to be highly sensitive to the
requirements of the segment it serves, sensitive to the changes in that segments
and strive to be the best in that segment. The author’s personal submission in that
the Mercedes Benz is the best luxurious vehicle in Zimbabwe. Modus
publications have also used concentrated marketing strategy as they offer the
Financial Gazette for a single and specific group.

Market Positioning

Once an organisation has made a decision on which segments of the market to enter, it
must decide which positions it should occupy in those segments. Philip Kotler defines
positioning as the act of designing an offer so that it occupies a distinct and valuable
place (niche) in the minds of the consumer relative to competing brands. Marketers
should therefore occupy niches, that is unoccupied positions in the minds of the
consumers.

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Positioning Matrix for the Retail Market

A positioning matrix or positioning map is a technique used by marketers to display the

relative position of various products/brands within a market. Marketers can use the
positioning map determine how their product or services appear to consumers in relation
to competing brands on one or more relevant characteristics. The positioning matrix is a
useful tool as it enables marketers to see gaps (niches) in the positioning of all brands in
the product/service class and to identify areas in which consumer needs are not
adequately addressed. The positioning matrix lists the most important product attributes
most often sought by consumers as illustrated in the diagram below:-

High Quality
HM Barbours
Greatermans
Truworths
Topics

High Price Low Price

Express, Shirt Centre No. 1 Stores, Nicks

Low Quality

As stated earlier on, marketers can use the positioning matrix to identify niches and this is
illustrated in the diagram as the high quality/low price position or segment is not
occupied by any clothing retail outlet. If any organisation wants to venture in the clothing
retailing business it is recommended that they occupy the unoccupied high quality/low
price segment, because it is niche and needs and wants of that segment are not being
addressed. However if any of the existing retail outlets wish to change its opposition
(repositioning) to occupy the niche, then there is need to change the entire marketing mix
(7ps).

Summary

Market segmentation refers to dividing the total market into manageable portions. The
reason for segmenting markets is that customers are different and for customer
satisfaction to be achieved there is need for marketers to formulate different tastes and
preferences. For a market segment to be considered viable there are universally accepted
criteria to be met namely identifiability, recognisability, sufficiency, accessibility,
stability, and sustainability.

Various basis can be used to segment consumer markets and these are demographic, Geo-
demographic, Socio-cultural, use-related, usage-situation and benefit segmentation. After

69
subdividing the market, it is important to select the most profitable and promising
segments and this is referred to as market targeting.

In market targeting three market coverage strategies can be used and these are
undifferentiated, differentiated and concentrated marketing strategies. When certain
segments are selected it is important to occupy viable positions so as to be more
competitive and this is called market positioning and it compliments segmentation as it
conveys the concept or meaning of the organisation’s offer in-terms of how it fulfills
consumer needs. To this end marketers use positioning matrix to identify the most
profitable positions to occupy.

Examination Questions

1. Your friend is opening a shoe shop. In a letter to this friend describe the concepts
of segmentation, targeting and positioning. Give examples that relate to a shoe
shop. (20 marks)

2. Certain criteria (conditions) must be met before a market segment can be defined.

a) List these criteria (5 marks)

b) Explain each of the criteria (10 marks)

d) Why are left-handed people not a market segment

(5 marks)

3(a) Choose a market and draw a positioning matrix to show how competing brands
are positioned (8 marks)

(b) Choose one of these brands and describe how to change its position (12 marks)

4(a) Draw a positioning matrix of a market of your choice (5 marks)

(b) Show with another matrix the positioning you expect to see in 2 years time
(5 marks)

(c) Explain why you expect to see the positioning in (b) (10 marks)

5(a) Explain why markets need to be segmented and why targeting is of such
importance to the marketer (10 marks)

(b) With the aid of a suitable diagram and using an example from a market of your
choice, explain what is meant by positioning (10 marks).

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 CHAPTER NINE
MARKETING PLANNING

Learning Objectives

After completing this chapter you should be able to:-

1. Explain the importance of marketing planning to an organisation.

2. Distinguish between strategies and tactics.

3. Explain the Boston Consulting Group (BCG) matrix as a planning tool.

4. Explain the Ansoff Matrix and how marketers can use it.

5. Describe how a marketing audit is carried out and explain its importance to an
organisation

Introduction

The best run and most successful companies have marketing plans, which provide
direction, focus and a unity of purpose for the organisation. Any person or business,
which operates without a plan, is like a ship without a rudder, which ever way the wind
blows is the way you will go. Obviously you will end up somewhere but is that where
you want to be? After selecting the most profitable and attractive segments
(segmentation) it is important for marketers to decide what to do in those targeted
segments and how to do it. For success to be achieved in those segments there is need for
marketing planning which shows what to be done in the targeted segments.

Definition

Marketing planning is defined as the process of establishing marketing objectives and

courses of actions to achieve the stated objectives. It is an on going process that assist the
organisation to adapt to the changing environment. Of paramount importance in
marketing planning is resource allocation, human and marketing resources.

Benefits of Marketing Planning

Marketing planning plays a critical role in any organisation and provides important
benefits when done properly.

a) It leads to the development of performance standards for control purposes. It is

important to set standards and targets to ensure that actual performance conform to
planned objectives and performance.

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(b) It forces an organised approach to activities. A plan provide direction on where to
go and how to go there. The organisation’s approach becomes organised as there
is a systematic way of performing activities.

(c) It promotes co-operation between marketing functions, other departments and top
management. If objectives are clearly formulated and courses of actions
developed, resources and tasks are allocated in a way that makes everyone
contribute efficiently to the achievement of objectives. Marketing planning
therefore enables the organisation to gain commitment from employees and
management.

(d) Marketing planning compels managers to look to the future, anticipate threats and
take steps in time to avert them. In other words it results in greater preparedness
for sudden developments or any eventualities i.e. contingency planning.

(e) The rapid change in the environment makes marketing planning indispensable as
it encourages pro-active management where management plays an active part in
creating the future of the organisation and not to be pulled passively along.

Strategic Planning

It is defined as the process of developing and maintaining a viable fit between an

organisation’s objective, its resources, and its changing environment. Strategic planning
aims at achieving an organisation’s mission and objectives by reconciling its resources
with opportunities and threats in the business environment.

Corporate Mission

The Corporate mission is the purpose of existence of the organisation. The mission
statement is extremely important at it provides direction and focus. It helps you, your
associates and customers know exactly what you do. The mission statement provides
guidance to staff, direction to planing and sets the patterns of behaviour within the
organisation. For example Topics stores’ mission statement which says “To fully satisfy
the needs of the whole family by providing the best value for money merchandise and an
enjoyable shopping experience” will underpin marketing planning, which can best be
described as the bedrock of success.

The Marketing Plan

The Marketing Plan is a written statement of a marketing strategy and time related details
for offering a particular marketing mix, to a target group. The written statement also
includes company resources required, results expected upon implementation and control
procedures to guard against digressing.

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Components of a Marketing Plan

As a major document that is fundamental to marketing success, a marketing plan

contains important sections or components. Philip Kotler gives eight components of a
marketing plan.

Executive Current Threats and Objectives Marketing

Summary Marketing Opportunities and Issues Strategies
Situation

Controls Projected Marketing Action Programmes

Budget or Tactics

1) Executive Summary

This is a brief overview of the entire plan and it summarises the main points about the
plan, goals and recommendations for management to gain a quick appreciation of the
marketing plan.

2) Current Marketing Situation or Situational Analysis

This Section makes an analysis of the market, product, competition, distribution and the
macro-environment to assess the performance of the company.

a) Market - This concerns the size of the total market and

segments, consumer tastes and preferences, perceptions, attitudes and any factors
that may affect consumers purchasing and consumption patterns and growth of
the market.

b) Competition - This involves identification of the Competitors, their size, goals,

market share, strategies (7p’s) weaknesses, strengths and any other relevant
information. Such information will enable the company to develop effective and
appropriate strategies (7p’s).

c) Distribution – This concerns analysis of distribution channels used, physical

distribution any developments that could have taken place.

(d) Macro-Environment – A examination of the macro environmental factors

is done to assess their impact. All steeple factors are analysed (socio-cultural,
technological, economic, education, political, legal and the natural environment.

3) Opportunity and Issue Analysis

Situational analysis leads to an identification of the main strengths/weaknesses

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 and opportunities/threats facing the organisation (SWOT) analysis.

Favourable Unfavourable
Internal S W
External O T

(a) Strengths/Weaknesses

An identification of the strengths and weaknesses of the organisation is of major

importance as these can influence the direction of the marketing plan. Strengths
are internal issues that management may count on as successful whilst weakness
are internal issues that need to be corrected if success is to be always achieved.
For example motivated and hardworking staff are a strength whilst inferior quality
of our products as compared to competing products is a weakness.

(b) Opportunities/Threats

Opportunities and threats are things you cannot control as they emanate from the
external environment. A marketing opportunity is a positive development or an
attractive arena for marketing action whilst a threat is a negative development
that can impact negatively on your business. For example an increased interest in
your product is an opportunity as this is an opening for your business to produce
more. On the other hand a threat could be new Government taxes which may
cripple your business.

3) Objectives

When SWOT analysis is done, objectives are now established to capitalize on

strengths and opportunities and to minimize or eliminate weakness and threats.
Considering your company’ s strength, weakness opportunities and threats
management should list objectives that relate to the organisation.

Marketers should establish marketing goals that are SMART i.e. specific
measurable, achievable, realistic and timed.

(a) Specific - Objectives must be specific so that everyone in the organisation knows
where the organisation is going. It is important to specify what exactly is to be
achieved so that the different sections in the organisation will be aiming towards
the same objective in all their activities.

b) Measurable - Objectives must be measurable. In other words the objective must

be quantified so as to be able to measure the company’s performance against the
objectives. When an objective is measurable one can tell if they have been
achieved or not. Objectives should be achievable. Unachievable.

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(c) Achievable - Objectives should be achievable. Unachievable objectives cause
demoralization among staff members.

(d) Realistic – objectives must be realistic and relevant to the organisation as

unrealistic objectives may never be achieved. For example it is unrealistic for a
company to set an objective of increasing market share from 20% to 90% in six
months. Such an objective cannot be achieved.

(e) Timed – objectives must have a time frame so that the company’s performance
can be measured against set company goals on a timetable. Such a time table will
enable corrective action if failure to meet objectives in time is noted.

A SMART OBJECTIVE

 To increase market share from 25% to 35% in 12 months (The objective is specific,
measurable, achievable, realistic and timed).

4) Marketing strategies

These are the broad marketing approaches to be used to achieve the set goals.
Strategies indicate the direction that should be taken, but do not say specifically
how results should be achieved. Strategies relate to products, pricing, distribution
and promotion but do not include the details of the individual courses of actions
that will be followed on a day by day or month by month basis (tactics). In
selecting strategies the organisation will use the Ansoff Matrix which identifies
four possible courses of action for the firm as illustrated in the diagram.

Ansoff Matrix
Products
Existing New
Market Penetration Product
Existing Markets Development

Market Development Diversification

New Markets or extension

a) Market Penetration
Selling existing products to existing markets. The market penetration strategy is
an intensive growth strategy used when a company has not fully exploited its
existing products and existing markets. It is a strategy that implies greater
penetration for an existing product within existing markets and segments. Greater
Penetration or increased market share is achieved through tactics such as reducing
the list price, increase advertising and sales promotions and increase distribution.

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b) Market Development or Market Extension
Selling or extending existing products to new markets or segments. This strategy
implies the development of new or wider markets for an existing product.
Advertising and sales promotion may also be used to develop market demand. For
example if National Breweries had reduced the price of its existing beers to sell to
the existing Zimbabwean market (Market Penetration) then in market
development they will introduce the same existing beers to other countries or
export markets or new markets.

(c) Product Development

Offering new products into existing markets. This refers to making changes to
existing products or introducing new products to existing markets. Changes on the
product could be in the form of new package, design, style, quality, or any other
aspects.

(d) Diversification
Developing new products for new markets. Since most products and services have
a life cycle or life span, a company can only survive in the long term through
diversifying, that is acquiring businesses that are unrelated to its current business.
Three types of diversification are:-

(i) Concentric Diversification

Where an organization adds technically related products to its current range to appeal to
the same customers. For example a shoe manufacturing firm may start to manufacture
belts, leather bags. This result in full utilization of equipment.

(ii) Horizontal Diversification

Where an organization adds technically unrelated products to the current range to appeal
to existing customers. For example a Hair Saloon may start to sell hand bags, ladies shoes
and cosmetics. Edgars group of stores is also offering insurance policies.

(iii) Conglomerate Diversification

When an organisation adds technically unrelated products to new and different
customers. For example Delta Corperation is in manufacturing, brewing, retailing and
other businesses.

Other growth Strategies

Integration growth
This is where an organisation acquires a business that is related to the current business.
Three main types of integration strategies that can be used are:-

i) Backward Integration
This is where an organisation takes control of supply systems and organisations so
that it supplies its own raw materials. The organisation will be assured of supplies.
For example Cold Storage Commission (C.S.C) owns ranches of cattle for its
own supplies.

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ii) Forward Integration
This is where an organisation takes control of distribution systems and
organisations so as to have its own retail outlets. For example Bata Shoe
Company own a chain of retail outlets. Forward and backward integration are
referred to as vertical integration. The Cold Storage Company also owns Meat
Pride Retail Outlets.

iii) Horizontal Integration

This is where a company takes over ownership or control of competing
companies. For example OK Bazaars taking over Mutomba. A merger, takeover
or buyout all constitute Horizontal Integration.

6. Tactics/Action Programs
Tactics are specific actions to be performed to achieve the objectives. Tactics are
in pursuance of the strategies and are concerned with what to do. They include
details of individual actions that will be followed on a day or month by month
basis. For example the strategy for a company may be product development. The
tactics may be changing the quality, package, design or brand name of the
product. Note that these should be time related.

7. Budget
The Marketing Budget is the section of the plan that shows the expected financial
outcomes from the plan. Having decided on particular strategies and tactics it is
important to know how much is needed to implement them and what will be the
return in terms of sales volume and sales revenue.

8. Controls
Managers should put in place control measures that indicate how the plan will be
scheduled, monitored and evaluated . targets and Quotas are spelt out for each
month or quarter thereby enabling constant monitoring and feedback to
management, which checks and informs of any deviation from planned and
budget activities. Activities can therefore be adjusted to meet budgeted sales,
costs and profit targets.

Strategic Business Units (S.B.U)

A strategic business unit is defined as a unit of an organisation that has a separate mission
and objective and this can be a company department or division, a product line, a single
product or a brand. Since marketing planning involves allocation of resources an
organisation should identify its key business or S.B.U's to assess their attractiveness in
terms of how much each S.B.U contribute and how much support each S.B.U deserve.

In the USA a leading consultancy group, (Boston Consulting Group) developed a

portfolio planning method known as the Boston Consulting Group Approach or the BCG
Matrix. The BCG is therefore a planning tool that is used by marketers for resource
allocation. The BCG (4 cell) matrix is formed using market growth rate and relative

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market share with close competitors as axes. The BCG classifies a company’s S.B.U into
the four quadrants as illustrated in the diagram.

++++ ++
High -- -- ----
0 --
stars Question marks
+ +++ +++
-- ---
++ 0
Low cash cows dogs

High Low
Relative Market Share

Key: + cash generated

- cash used/needed

In the BCG Matrix one should understand the characteristics of each quadrant and the
appropriate actions or strategies required for each quadrant.

a) Characteristics and Strategies

The characteristics of each quadrant can best be described in terms of relative

market share/market growth rate and cash generated/cash used or needed.

i) Question Mark
Characteristics – High market growth and low market share products. Cash
needed is more than the cash generated. The question mark, problem child or
wildcat has potential for growth since it is in a market growing at a high rate.

Strategies – Build Market share. Invest in product development create awareness,

advertise heavily, use sales promotions and intensify on distribution.

i) Stars
Characteristics - High market growth and high market share products, cash
needed or used is equal to cash generated. Self sustaining and balanced cash
flows. There are investment opportunities.

Strategies: - Hold, preserve market share position or increase and consolidate

competitive position. Develop new markets and invest beyond current cash
generation abilities to deter competition.
ii) Cash-Cows
Characteristics – Low market growth and high market share, cash generated is
higher than cash used. These are the foundational products of the firm, with high
cash provisions for other products.

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 Strategies
Cut costs, divest by liquidating and selling off assets or reassign them to more
promising products.

iii) Dogs
Characteristics – Low market share and low market growth rate. In the short
term, cash generated is equal to cash used, but in the long term, cash generated is
less than cash required.

Strategies
Divest by selling off the product or assets. Reassign the resources to promising
SBU’s.

Balanced Portfolio

As the B.C.G classifies a company’s departments product lines or individual products in

the different quadrants. It is important that a company establishes a balanced portfolio,
that is a collection of product lines, individual products or departments that brings
prosperity. An organisation without a strong financial backbone cannot survive in the
long term. When a company has more S.B.Us generating cash and less S.B.U’s using
cash it has a balanced portfolio. On the other hand if a company has more S.B.U's in need
of cash and less S.B.U’s generating that cash then the portfolio is unbalanced. The two
diagrams illustrates a balanced portfolio and unbalanced portfolio.

(a) A balanced Portfolio

High Stars O Question Marks

O O
Low Cash cows Dogs
O O O
O
High Low
RELATIVE MARKET SHARE

(b) An unbalanced Portfolio

High Stars Question Marks

Low 79
 O O O
O
Cash cows Dogs
O O O

High Low
RELATIVE MARKET SHARE
Key :- O Product

a) Diagram (a) shows a balanced portfolio as there are more cash generators (stars
and cash cows) than cash users (dogs and question marks) which are few.
Essentially there is a lot of cash generated that can support other S.B.U's.

b) Diagram (b) shows an unbalanced portfolio as there are less cash generators (cash
cows and stars) and there are more cash users (dogs and question marks).
Essentially less cash is generated whilst a lot of less cash is needed. A company
with an unbalanced portfolio is not financially healthy.

Marketing Audit

It is important for an organisation to review its marketing efforts, and performance to

determine any problem areas. This is done through a marketing audit – a comprehensive,
systematic, independent and periodic examination of a company’s environment,
objectives, strategies and activities with a view to determine problem areas and
opportunities and recommending a plan of action to improve the company’s marketing
performance. A Marketing Audit is a fundamental part of marketing planning which takes
a big view of the business and makes an assessment of the entire marketing program. A
marketing audit enables the organisation to understand how it relates to the environment
in which it operates and enables a detailed assessment of the current marketing plans.

The marketing audit can be conducted by Internal Staff such as those in marketing
department or can be conducted by outsiders such as management consulting firms.
Internal staff may be biased and thereby project a false picture of the marketing
performance of the organisation.

Structure of the Marketing Audit

A Marketing audit is structured in two parts namely:- External Audit and Internal Audit.

1) External Audit
The external audit makes an assessment of the outside controllable variables such
as the environmental forces (STEEPLE). The External Audit Covers the
following:-
The external audit addresses the following:-

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 a) Business and Economic Environment - In analysing the Business and
Economic environment the following are looked at:-

i) Economic - trends in interest rates, inflation, exchange rates and

cost of labour and raw materials should be assessed.
ii) Political/Legal – Political and legal developments should be
known
iii) Socio-Cultural – The way people live, their culture, values and
language should be looked at.
iv) Technological – Technological advancements should be embraced
as they create opportunities.

b) The market

In analysing the market the following are looked at:-

i) Identification of the major competitors, their size, their market share and
market coverage.
i) Their key strengths and weaknesses, marketing standing and reputation,
production capabilities extent of diversification and any international
links.

2. Internal Audit

The Internal Audit is concerned with controllable variables such as the marketing
mix, policies, objectives and timely information to be used in decision making
strategies. The Internal Audit addresses the following

a) Own Company
This is where an examination of the Company’s offering is carried out in terms of
the following
i) Sales of the organisation by product, by customer and by location.
ii) Market shares and profit margins of all products.
iii) Marketing procedures, policies and the organisational structure.
(iv) All marketing mix variable such as product development, advertising, sales
promotions, personal selling, public relations, sponsorship, pricing, discounts,
distribution, packaging, branding, participants, physical evidence, process (3p’s)
after sales services, dealer support and many more.

b) Operations and Resources

This is an examination of variables such as:-
i) Marketing objectives – are the marketing objectives clearly stated and consistent
with corporate objective. Are they SMART (specific, measurable, achievable,
realistic and timed?).

ii) Are sufficient resources available to achieve the stated marketing objectives?

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iii) Structure – are marketing responsibilities, authority and duties clear. Is the
structure still relevant to the current situation? Is functional, product, customer or
geographical structure still appropriate?

iv) Marketing Information System – Is the marketing information system reliable

in terms of providing accurate, sufficient and timely information to be used in
decision making.

v) Control System – Are there adequate control mechanism and procedures to

ensure that planned objective are achieved.

STEPS IN CONDUCTING A MARKETING AUDIT

In conducting a Marketing Audit the following steps are followed:-

a) Determine the pre-audit situation and plan the audit objectives. It is important to
know the situation prevailing before the audit takes place. It is also important to
state the audit objectives, that is what the audit seeks to achieve.

b) Assemble the environment information from:-

i) STEEPLE – An analysis of the macro environment will provide information about
changes taking place.

ii) The SWOT analysis – Information from both the Internal and External
environment enables the organisation to identify strengths, weaknesses,
opportunities and threats (SWOT).

c) Determine Organisational Performance in the Industry, the market, product

competition, promotional techniques, distribution, pricing and the overall
performance of the organisation – such an analysis will enable the organisation to
know where its stands in terms of performance.

d) Express recommendations and objective and report to top management.

Objectives are what the organisation should aim to achieve in light of the
strengths, weaknesses, opportunities and threats.

e) Set out alternative and appropriate strategies that can be adopted by the
organisation to achieve the stated marketing objectives. The strategies are the
broad methods chosen in pursuance of the marketing objectives.

f) Provide details of programmes, resources (financial, material, human) costs and

recommended tactics – it is important to define the action programmes or tactics
and the resources required to implement the strategies and tactics to achieve the
desired outcomes.
Summary

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Marketing planning plays an important role to the success of any organisation. A properly
formulated marketing plan will guide the organisation and will enable it to adapt to the
dynamic marketing environment. In planning, an organisation should consider its
mission as it provide focus.

The components of a marketing plan are executive summary, current marketing situation,
threats and opportunities, objectives and issues, marketing strategies, tactics, projected
marketing budget and controls. However as marketing planning involves the allocation of
resources, it is important for an organisation to assess its current portfolio to determine
the attractiveness of each strategic business unit of product. The BCG Matrix assists in
this process as it enables the organisation to identify its products, market position relative
to competitors and evaluate whether the products are in growing or mature markets and
identify the balance of the overall portfolio of products and assess which products should
be supported for growth or divested to free up resources.

The organisation should also undertake a marketing audit to evaluate and assess the
performance of all marketing – related issues, identify any problem areas and recommend
appropriate actions.

Examination Questions

1(a) Explain the differences between horizontal and vertical integration (5 marks)
(b) Show with examples from your country how both horizontal and vertical
integration has been used by organisations (15 marks)

2(a) Explain why marketing objectives should be kept SMART (Specific, measurable,
achievable, relevant, timed) (5 marks)

(b) Give 3 examples to show how SMART objectives are used. (15 marks)

3(a) What is an organisation mission? (5 marks)

(b) Show how mission statement underpins effective marketing planning (15 marks)

4(a) Using the relevant diagram, explain the Ansoff Matrix (8 marks)
(b) Selecting one of the relevant strategies from the matrix you have supplied, briefly
explain the marketing tactics you would use (12 marks)

5(a) What is a SWOT analysis (5 marks)

(b) Show with examples how SWOT analysis is of benefit to marketing management.
(15 Marks)

6(a) Briefly describe the characteristics of products within each quadrant of a Boston
Matrix (10 marks)
(b) Track a typical product around the matrix describing the differences in the actions
needed from management as it progresses (10 marks)

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7(a) What is a SWOT analysis (5 marks)
(b) Show with examples how SWOT analysis is of benefit to marketing management.

8(a) Briefly describe the characteristics of products within each quadrant of a Boston
Matrix (10 Marks)
(b) Track a typical product around the matrix describing the differences in the actions
needed from management as it progresses (10 marks)

9(a) Use a Boston Consulting Group (BCG) diagram (correctly labelled) to describe
the product range of a company with which you are familiar. In your opinion does
the company have a balanced portfolio? (12 marks)
(b) Explain how the BCG matrix can be related to the product life cycle (PLC)
(8 marks)

10(a) Draw a Boston Matrix to illustrate a well balanced portfolio

(8 marks)
(b) Show the sources and uses of cash and how it flows within the quadrants (12
marks)

11(a) Define a marketing audit (3 marks)

(b) What is the function of a marketing audit (3 marks).
C(i) List and explain the steps involved in a marketing audit
(6 marks)
(iii) Give examples of the practical problems associated with each step (8 marks)

12. In a report to your Manager, very briefly outline the major advantages and
disadvantages of 3 different media channels you might consider using for your
marketing communications (2 marks for report format and 18 marks for content)
(20 marks).

CHAPTER TEN
MARKETING MIX

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 PRODUCT

Learning Objectives

After completing this chapter you should be able to:-

1. Explain the 7p’s and 7c’s of the marketing mix.

2. Distinguish between industrial goods and consumer goods.

3. Define branding, its importance and explain the different types of brand names.

4. Distinguish between product attributes and consumer benefits.

5. Identify and explain the roles of packaging.

6. Explain the new product development process and the role research plays in new
product development.

7. Show how the product life cycle can be used as a Marketing tool by marketers.

Introduction

The marketing Mix is a set of controllable marketing variables that the marketer blends or
mixes together to win the patronage of the targeted segment. The marketer is therefore
referred to as the “mixer of ingredients” who should mix them and produce an offer to the
satisfaction of the target group. The marketing manager should blend product, price,
promotion and channels of distribution within the framework of the uncontrollable
marketing environment that is dynamic. The controllable elements should therefore be
altered in the short run and long run to adjust to the changing market conditions. The
elements of the marketing mix are the ingredients that should be mixed to produce an
offer to the satisfaction of the consumer.

For the marketer to construct the appropriate marketing mix there is need for information
which is obtained through marketing research) covered earlier on). As the marketing mix
is determined by the target group in terms of their characteristics and consumption
patterns (consumer/buyer behaviour). Consumer/buyer behaviour studies will reveal that
consumers have different buyer behaviour characteristics and consumption patterns that
should be grouped to bring about homogeneous subgroups (segmentation) so that each
group receives a unique marketing mix.
Elements of the Marketing Mix

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The simplified marketing mix consists of the 4p’s (Product, Price, Place and Promotion)
whilst the extended marketing mix include other 3p’s namely physical environment,
participants and process. The marketer should co-ordinate and integrate the mix elements
to influence customer buying decisions. In formulating the marketing mix the marketer
should consider the 7 Cs which refers to customer perspectives to the 7p’s marketing mix.

The 7p’s and the 7c’s are:-

Product Customer Value

Price Cost
Place Convenience
Promotion Communication
Physical Environment Confirmation
People/Participants Consideration
Process Co-ordination

PRODUCT

A product is defined as anything that can be offered to a market for attention acquisition
use or consumption that may satisfy a need or want. The term product also include
intangible items such as services and ideas. It is therefore clear that a product is not just a
tangible object with physical attributes, rather it is something the consumer buys as a
solution to his/her problems and also to satisfy his/her needs.

The product embraces product range, product quality, branding, and packaging, labeling,
after sales service, guaranties and warranties.

Levels of a Product

A product has three levels, which are core product/benefits, actual product augmented
product.

a) Core Product/Benefits
This refers to the main or core benefits that the consumer derives when they buy
or use the product. The core benefits constitute the reasons why one makes a
purchase. In designing a product, marketers should first define the core benefits
the product will provide to the consumers. It is through research that customer
needs and benefits are revealed. For example when a lady buys a knitting machine
the core benefit is good knitting. A marketer should design a knitting machine that
does exactly that.

b) Actual Product
This refers to the physical product that provide the core benefits. The actual
product also refers to the product’s parts, style, features, brand name, packaging
and other attributes that combine to deliver the core benefits. In our example of

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 the knitting machine the actual product refers to the different parts that make up
the product.

c) Augmented Product

This refers to extra benefits that are offered to the customer. Augmented product
or augmented benefits include customer advice, 24 hour after-service, help-line,
free lessons, delivery, installation etc. In our knitting machine augmented benefits
include free lessons on how to use the machine, help-line and delivery.
Augmented benefits play a crucial role as they create repeat purchases and help
secure loyal customers, and thereby enabling the organisation to have a
competitive edge.

CLASSIFICATION OF PRODUCTS

1. Industrial Goods – These are industrial products purchased for further

processing, for use in making other products or for use in conducting a business.
Industrial goods are classified into:-

(a) Capital Items

These are expensive goods that include installations such as buildings and offices.
Accessory equipment such as typewriters, photocopiers, power tools etc are also
industrial products. Capital items affect the scale of operation in a company and
are usually purchased directly from the producer by user.

(b) Materials and Parts

These are goods that enter the finished product completely. Raw materials are
unprocessed item which become part of the final product. Component parts are
products that enter the finished product. For example tires for vehicle batteries,
aerial for a television are all component parts.

(c) Supplies and Services

Supplies are goods required to aid the firm’s operations, to keep it functioning and
not directly used in the production process. Supplies include maintenance supplies
such as typing paper. Services are those activities specially carried out to support
the operations of a firm. These include business consultancy, cleaning, security,
legal, catering and many more.

2. Consumer Goods
These are goods purchased by final consumers for personal consumption.
Classifications of consumer goods are based on consumer shopping habits. And
include:-

(a) Convenience Goods

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 These are items that require little thought, little effort and prior knowledge to
make a purchase. Convenience goods are further classified as:-

(i) Staples
These are foodstuffs and items purchased regularly and repeatedly. Examples are
bread, toothpaste, milk and many more.

(ii) Emergency Products

These are purchased to satisfy an immediate need. Examples include fuel and pain
killers. Retail outlets for emergency products may open 24 hours a day. Service
Stations and Pharmacies are examples.

(iii) Impulse Goods

These are purchased without forethought, planning or search effort. For example
sweets, chocolates and many more.

(b) Shopping Goods

These are goods where, before buying, the buyer does some “shopping around”
that is making comparisons on the basis of quality, design, durability, price,
suitability, special payment terms and guarantees. Examples include beds,
refrigerators, radios, clothing and many more.

(c) Specialty Goods

These are goods with unique characteristics or brand identification that the
consumer particularly wants and is willing to make a special effort to find them.
Examples include specific brands of products such as vehicles, watches, radios,
health foods, cameras and many more.

(d) Unsought Goods

These are goods that the consumer do not know about or knows about but do not
want them hence consumers do not look for them in shops. These could be new
products, for example the latest food processors or already known products such
as insurance policies.

Individual Product Decisions

Marketing Management should make decisions on various factors in the development and
marketing of individual products. Marketing Research will aid marketing management in
making decisions on the following areas:-

1. Product Attributes
2. Branding
3. Packaging
4. Labeling

1. Product Attributes

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 Product attributes refers to the quality, features and design of the product.

(i) Quality
The quality of a product refers to the level of performance in terms of durability,
reliability, speed, ease of operation or use. Quality is therefore a positioning and
competitive tool that an organisation can use to occupy an unoccupied space in
the mind of a consumer. Marketing Management should define quality from the
consumer’s perspective so that the quality level of a product matches needs of the
target market.

(ii) Product Features

Features of a product refers to the different parts that make up the product. For
example the features of a Mitsubishi Pajero vehicle include electric windows, air
conditioning, air bag, four wheel drive and many more. Features of a product
differentiates the product from competing products. Product features provide
benefits to consumers. For example the air bag on a vehicle provide the consumer
benefit of guaranteed safety. In other words a product feature is what the product
is and a consumer benefit is what the feature does.

(iii) Design
The design, shape or style of a product is a powerful competitive tool, which
differentiates a company’s products from competing products. It is important for
marketers to give careful attention to the styling and appearance of the product as
well designed products win the attention of consumers. First impressions are
created by how well designed or poorly designed a product is.

2. Branding
A brand is defined as a term, name, symbol or design, or a combination of them
which is intended to identify the goods or services of one seller from those
competitors. Branding includes the use of brand names, brand marks and trade
marks.

(i) Brand Name

A brand name is made up of words, letters or number that can be said aloud and
that gives an idea of the attributes of a product. Perfection, Big Ben, Dolphin are
brand names for bar soaps.

(ii) Brand Mark

A brand mark is the part of the brand that is in the form of a symbol, design
particular colour or lettering. For example the cascade package has four trees and
these constitute a brand mark. The nike symbol is a brand mark.

(iii) Trade mark

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 A trade mark is a brand that is given legal protection because under the law. It has
been appropriated exclusively by one seller. It is therefore illegal to use a
registered trademark of another company. For example Telecel Zimbabwe was
taken to court by a computer company for using the name Mango. Lyons is also a
registered trade mark.

The Importance of Branding

Branding is of great importance to consumers, producers and traders for the following
reason:-

(a) Brand names differentiate a company’s product from those of competitors.

(b) Branding facilities recognition of products by buyers as they are able to identify a
company’s products.
(c) Brand names speeds the decision-making process as evaluation of alternatives
maybe lessened or eliminated and thereby making consumer shopping easier.
(d) Wholesalers and retailers are more ready to accept a branded product and are
willing to provide more display space.
(e) Branding leads to repeat buying and the reduction of marketing costs.
(f) A prestigious brand can improve the standing of the retailer because a brand is
expressive of standards, values and qualities quite unique to each product. For
example the fact that Savile Row suits are carried by Barons improves the
standing or image of Barons.

Types of Brands

In branding products marketers can use the following types of brands:-

(a) Family Branding

A family brand or multi-brand refers to the same brand name for several products.
In our market situation an example is Red Seal where there is Red Seal Rice, Red
Seal Salt, Red Seal Flour, Red Seal Cooking Oil. Another example is the Johnson
and Johnson Company, whose products include Johnson & Johnson Baby Lotion,
Baby Powder, Baby Oil, Baby Shampoo, all bearing the family brand name,
'Johnson & Johnson'.

Advantages of Family Branding

(i) The goodwill that goes with one or two of the products may help promote the
others. Essentially, awareness and reputation can built up over a whole range of
products. For example a mother may know all Johnson and Johnson products.

(ii) Encourages customers or brand loyalty to the entire product range where one may
buy all the products repeatedly and consistently. Consider the advert, which says
“Zvaitwa nevakuwasha tazviona. Chivhurai mapasuru tione kuti muneyi. Inga

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 mune Red Seal Roller Meal, Red Seal salt, Red Seal Rice, Red Seal Cooking Oil,
neRed Seal Flour”. Translated into English. “We have seen what the in-laws have
done now lets see the parcels. There is Red Seal Roller Meal, Red Seal Salt, Red
Seal Rice, Red Seal Cooking Oil and Red Seal Flour”.

(iii) Costs of introducing a new product will be less because there is no need for heavy
advertising to create brand recognition and preference more importantly
introducing the new product becomes quicker and easier. For example, albeit
hypothetical, if National Foods (Pvt.) Ltd would introduce a product and brand it
Red Seal Margarine it is less expensive, quicker and easier to introduce it, in the
market because of the name Red Seal attached to it.

(b) Individual Brands

Individual brands are products with each having a separate and different brand
name. For example Olivine Industries have separate names for its products
namely romance, jade and sport bath soaps. National Breweries also have separate
brand names namely Bohlingers, Castle, Lion, Centenary, Zambezi, Black Label.

Advantages of Individual Brand names

(i) Individual brands stimulate competition within and outside the firm. Bath soaps
produced by olivine Industries will compete with each other for a share in the
market.

(ii) If one product fails this will not affect other brands. For example failure of a
single brand will not affect other brands at Olivine Industries. On the other hand if
any product, which bears the name Red Seal, fails on the market, this is most
likely to affect other products, which bear the same name.

(c) Generic Brands

These are unbranded and plainly packaged products identified by their contents,
manufacturer of middleman. For example paraffin, coal etc.

(d) Dealer Brands (Middlemen’s Brands)

This is where a producer sells a product under a middlemen’s brand. These are
also referred to as private brands or own-label brands. Examples are OK’s Pot `O’
Gold and TM Super Savers where various products are sold under the two names.
Own-label brands are sold at lower prices, resulting in high gross margins for the
middlemen.

3) Packaging

Packaging refers to the activities of designing and producing the container or wrapper for
a product. Packaging plays an important role, such that other marketers consider it as an
element of marketing mix, i.e. an 8th P that stand on its own.

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Roles of Packaging

(i) Protection
The package protects the product in transit from the manufacturer to end-user so
that it retains its freshness until its finally consumed. The product should be
protected from different and varying weather conditions.

(ii) Identification
The package should identify the product and distinguish it from competing
products. A liquid in a transparent plastic bottle could by anything. Hence the
shape, colour or design of the package should identify the product and make it
instantly recognizable.

(iii) Disposability
Empty packages should be disposed of safely. Environmentally friendly packages
are preferred as they easily decompose over a shorter time span. Consider the easy
disposability of the coke plastic package.

(iv) Added Value

A good package adds value to the product as first impressions may be created by
the appearance. Marketers should design packages that consumers will perceive as
appropriate thereby adding value to the product.

(v) Legal
A package has a legal role and legal requirements should be met in terms of
labeling where information on quantity or weight, ingredients, instructions and
expiry date is provided. This is in tandem, with the consumer Bill of rights that
stated that the Consumer has a right to information to ensure an informed
decision.

(vi) Promotion
Effective packaging serve as a promotional tool that attracts attention and create
instant recognition of the company or brand. As the package carries information,
marketers can communicate through the package.

(vii) Convenience
The package should be designed in such a way that it offers convenience to the
customer. For example it is important that a package can be carried easily in
terms of handling and re-usability where the empty package can be conversed to
some other use after the original contents have been consumed.

4. Labeling
A label is part of the package and labels range from simple tags to complex
graphics which is attached on the product.

Functions of a label

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i) Identification – a label identifies the product or brand. For example the name
Geisha stamped on the package identifies the bath soap.

ii) Grading – A label grades the product. Products have different grades and it is
from the label that one knows. For example course salt and fine salt.

iii) Description – A label describes several things about the

product. For example instructions on how to use the product, expiry dates, who
made the product, where the product was made, its contents and how to use it
safely.

iv) Promotion – A label can also promote the product through its attractiveness in
terms of colour, design or symbol used.

PRODUCT MIX DECISIONS

Product Mix
This refers to the total assortment of products a company offers for sale. For example the
product mix for National Foods refers to all products that it sells. The product mix for a
college refers to all the study programmes it offers.

Product Line
This refers to the product or range of products aimed at one target market. A product line
consist of a group of product items which have similar characteristics and similar uses in
fulfilling customer needs. For example all variations of cooking oil offered by National
Foods make a product line. National Foods offers product lines such as cooking oil, flour,
rice, maize meal, stock-feeds and others.

Reasons for having product lines

i) When a single line fails or face difficulties and the organization has other lines, it
has somewhere to lean on. For example millers have been affected severely by the
reduction in demand for maize meal as many consumers prefer to take their own
corn to grinding mills. If Blue Ribbon Foods and National Foods relied on maize
Meal lines only, then they would have liquidated by now.

iii) Introducing new items

When a company is already offering other lines, it can introduce a new item at
relatively little extra costs as the equipment, labour or expertise may already exist
in the company. For example assuming that National Foods (Pvt.) Ltd first
introduced the maize meal line, then they introduce the flour line because both
flour and maize meal are powders. The same equipment, labour and expertise
used in maize meal would be applied in the production and marketing of flour.

Product Mix Width/Breadth

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This refers to the number of product lines the seller offers in the product mix. In our
National Foods example, it offers five lines. When a company increases the breadth of
the product mix it will reach a series of segments.

Product Mix Depth

This refers to the number, version or formulations of items offered within each product
line. For example if flour is in three formulations or versions namely cake, plan and self-
raising flour with 2kg, 5kg, 10kg and 20kg of each item then the Depth is obtained by
multiplying the number of sizes (4) and the number of formulation (3) to give a depth of
12 items. Depth ensures more penetration into certain segments.

Product Mix Consistency

This refers to how closely the products are related in terms of end use, production
facilities, distribution channels etc. In our example of National Foods there is more
consistency as maize meal and flour are powders and are produced using the same
machinery and are distributed at the same place. Stock feeds are produced from residue
obtained from maize meal and flour. Cooking oil may also be produced from maize.

New Product Development Process

The product life cycle (PLC) postulate that companies can not rely on their current
products to produce the target rate of sales and profit growth. More importantly an
organisation must develop and introduce new products on the market in order to survive
in the long-term. As new product development is a high-risk activity, organisations are
compelled to meticulously follow the new product development process in order to
minimise risk of new product failure.

A New Product

There are different types of a new product and these include:-

i) A new product could be an improvement or development of an existing product to

offer extra benefits to customers. For example the New Surf Super Blue which
has an improved performance and offers an extra benefit of being kind to “your
hands”.

ii) A new product could be the introduction of a completely new product, one, which
has never been marketed before, or one, which is introduced in an entirely new
market. For example Metropolitan Bank introduced Tele-banking for the first time
in Zimbabwe.

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iii) A new product could be the development of a product which has the same use as
an existing product but which is technically different or produced by different
technology and which may be better. Many technical products fit this definition.

Stages In the New Product Development Process

Idea Idea Concept Development Marketing

Generation Screening and Testing Strategy

Commercialisation Test Product Business

Marketing Development Analysis

1) Idea Generation
A company should gather as many ideas as possible. New ideas are collected from
internal and external sources such as employees, customers, middlemen, and
competitors, trade agencies and advertising agencies.

2. Screening Ideas
The large number of ideas generated are now ranked, evaluated, and reduced.
Impractical ideas are removed and only serious contenders are passed to the third
stage. In screening ideas management will consider the skills, technology and
resources to produce the product.

3. Concept Development Testing

At this stage an idea that will have survived the screening process is now turned
into something more tangible that consumers can relate in terms of fulfilling real
consumer needs (product concept). The concept is tested, that is getting feedback
from customers, and distributors about the proposed new product.

4. Development of Marketing Strategies

Once consumer and trade reaction are known to the proposed product, it is
important to plan how to introduce the proposed new product. The strategy
document will cover all elements of the marketing mix (that is the product price,
place and promotion. It will also cover sales and profit forecasts, product
positioning and marketing budget.

5. Business Analysis
With the marketing strategy in place, it is important to consider potential earnings,
costs, and budgets in terms of business point of view in order to know how they
satisfy Company goals and objectives. If company goals and objectives can be
met then the next stage of product development will take place.

6. Product Development
At this stage the product concept is now turned into physical reality, that is
developing a physical product that meets the expectations of consumers.

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7. Test Marketing
At this stage the product and the entire marketing program are tested in a limited
geographic area to elicit consumer and trade reactions in real market conditions.
Adjustments will then have to be made in regard to the entire marketing mix.
Although test marketing is important it can reveal information to competitors.

8. Commercialization
Test Marketing provides management with information that allows it to make a
final decision on whether to launch the product or not. If management decides to
go ahead and market the product on a commercial basis then they have to launch
it. In launching a product it is important to consider when to launch it, where to
and how to launch it.

NEW PRODUCT FAILURE

New product development will remain a high risk activity despite all efforts to reduce the
risk. It happens that products that pass all the tests and stages and are launched into the
market can fail. A new product is regarded to have failed when it fails to generate the
desired level of sales and profits within a stipulated or reasonable time. When a new
product fails it normally disappears from the market. Products that have failed in
Zimbabwe include Fanta Still, Tropical Punch, 929 Mazda Vehicle.

Reasons for New Product Failure

There are various reasons why new products fail on the market and these include:-
1. Poor marketing research – The purpose of marketing research is to gather
information to be used in making decisions. If inadequate, and incorrect
information is gathered then management will make wrong decisions on the new
product development process.

2. Underestimating competitor capabilities – competitors pressures can become

too strong than expected and thereby effectively countering an organisation’s
efforts.

3. Ineffective advertising – advertising creates awareness of the new product and if

it is not properly done then the new product may remain unknown.
4. Overestimating the market size – The market could be very small to the extent
that not enough of the new product can be sold to cover all costs involved.

5. Product’s failure to meet customer expectations – If the quality, design and

performance of the new product fails to meet customer expectations then it will
fail.

6. Ineffective distribution – If a new product is not available or

is not easily accessible then it may fail.

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7. Inadequate resources – lack of financial, material and
human resources support for the new product also leads to failure of a new
product on the market.

8. Bad timing – certain products are seasonal and should be launched at the right
time. More importantly certain economic and market conditions prevailing at a
certain period may not be conducive to the launch of certain new products.

9. Overpricing – The price of the product should be within the expectations of the
target market. Over-pricing will lead to a rejection of the new product.

10. Technological/machinery problems – constant machinery breakdowns will

comprise on the desired quality of the new product, resulting in an inferior
product, being produced.

The Product Life Cycle (P.L.C)

When a product is finally launched, it enters the market and starts a life cycle. As a
fundamental part of marketing, the product life cycle is an important tool for analysis and
planning of the marketing activities. The product life cycle consist of four stages that a
product goes through from the beginning to the end. The stages are introduction, growth,
maturity and decline.

The product life cycle assists marketing management to identify distinct problems and
opportunities, which arise at different stages in the product’s history. Having identified
problems and opportunities at each stage marketers will adopt the appropriate marketing
strategies. The marketing success of a firm will depend largely on its ability to manage
the life cycle of its products, hence there is need for judicious management.

Sales
Profits

Intro Growth Maturity Decline

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1. Introduction Stage

a) Characteristics

i) Sales are low as the product is introduced in the market. Many consumers are not
yet aware of the product hence sales are very low.
ii) Profits are non-existent because of heavy expenses incurred in research, product
development and product introduction.
iii) Customers are innovators, those adventurous consumers who tries a product
immediately when it appears on the market.
iv) There are no competitors if the product is totally new or just a few if the product
is already known.

b) Strategies

i) Product – offer a basic product without fancy features.

ii) Price – Penetration pricing if there is competition already in the market.
Skimming pricing if there is no competition.
iii) Distribution – Distribution is patchy and limited to enable monitoring of
acceptance of new product.
iv) Promotion – Heavy promotional efforts (advertising, sales promotion, personal
selling) to create awareness, and induce trial and secure distribution outlets.

2. Growth Stage

(a) Characteristics
i) Sales start to rise as more consumers become aware of the new product.
ii) Profits start to rise.
iii) Customers increase as early adopters try the product.
v) Competitors start to enter the market as they offer slight variations of the original
product.

c) Strategies

i) Product – improve product quality, features and offer variety to counter

competitor offers.
ii) Price – slightly reduce prices to penetrate the market.
iii) Distribution – increase distribution and secure more shelf space
iv) Promotion – High promotion to differentiate between competitor’s products and
build interest and loyalty.

3. Maturity Stage

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 Characteristics

i) Sales reach peak

i) Profits are high and start to decline
ii) Customers buying the product are the early and late majority.
iii) There are many competitors.

a) Strategies

i) Product – Differentiate the products and offer more variations to win new
customers.
i) Price – reduce prices to maintain existing market share.
iii) Distribution – intensify distribution and find new
distribution outlets.
iv) Promotion – increase promotion to stress brand differences and benefits and to
encourage brand switching.

4. Decline Stage

a) Characteristics
i) Sales decline as a result of changes in customer tastes and preferences, increased
competition technological advances and changes in attitudes towards the product.
ii) Profits will decline as well.
iii) Laggards may join
v) Competitors will pull out.

b) Strategies

i) Product – drop the product, liquidate it or maintain the product hoping that
competitors will leave the industry.
ii) Price – reduce price to attract laggards and other consumers.
iii) Distribution – phase out unprofitable outlets.
iv) Promotion – reduce advertising and sales promotion.

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SUMMARY OF THE PRODUCT LIFE CYCLE CHARACTERISTICS, STRATEGIES AND
OBJECTIVES

CHARACTERISTICS INTRODUCTION GROWTH MATURITY DECLINE

Sales Low Rising Perk
Declining
Sales Sales Sales

Profits Negative Rising High Declining

Profits Profits Profits

Customer Innovators Early Middle Laggards

Adaptors Majority

Competitors Few Growing Many Rivals Declining

Number Number
Marketing Create Maximise Maximise Reduce
Objectives Product Market Profit expenditure
Awareness Share while or milk
And induce defending the brand
trial market share
Strategies Offer a Offer Differentiate Phase out
Products basic Variety or and weak items
product improved Diversify Brands
product

Price Skimming or Price to Price to Cut

Penetration Penetrate match or Price
Market beat
Competition

Distribution Patchy or Intensive Intensive Phase Out

Selective Unprofitable
Outlets
Advertising Building Build Stress Reduce
Product Awareness Brand
Awareness And Differences
Interest And
Benefits

Sales Heavy Sales Reduce to Increase to Reduce

Promotion Promotion to take encourage
Entice trial Advantage brand
Of Heavy switching
Consumer Demand

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SUMMARY

The marketing mix is of great importance to an organisation as it represents the

controlled use of resources. The success of an organisation depends on how it manages
the marketing mix elements namely product, price, place, promotion, participants,
physical evidence and participants.

Product is the first P of the marketing mix. Product related decisions that marketers make
relate to quality, branding, packaging, labelling, guarantees and warranties. In branding
marketers should make a decision whether to use individual or family or brand names by
considering advantages and disadvantages associated with each of the types of branding.
Another important aspect to product policy is packaging which plays a crucial role to the
success of a product or brand. In putting in place a package marketers should ensure that
the package is capable of performing the different roles of a package. Labeling is also
important as it provide vital information to users.

There are different classification of products namely consumer products and industrial
products. Marketers should understand the different classification so as to formulate the
appropriate marketing approach to market each class of products.

Effective product portfolio management suggest that an organisation should develop new
products from time to time for it to survive. In producing a new product it is important for
marketers to carefully go through all the new product development stages to reduce
chances of new product failure. The stages are idea generation, idea screening, concept
development and testing, marketing strategy development, business analysis, product
development, test marketing and commercialisation. An understanding of reasons why
new products fail on the market is of paramount importance so as to enable marketers to
minimise chances of new product failure. When a product or service is launched in the
market it goes through the product life cycle that is stages. It goes through in its life span
from beginning to end. The four stages namely introduction, growth, maturity and decline
presents problems, challenges and opportunities that should be dealt with. The product
life cycle is an analytical and planning tool that marketers should make use to determine
the marketing resources required at each stage.

EXAMINATION QUESTIONS

1(a) Explain the difference between a product attribute and a consumer attribute (5
marks)
(a) Use 3 examples to describe how an identified consumer need is translated into a
product attribute.

2(a) Discuss with examples the roles of packaging (10 marks)

(b) Using two examples show how packaging can effectively be used to communicate
tactically to consumers (10 marks).

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3(a) In the context of product planning, explain depth, width and consistency
(10 marks).
(b) Using two examples show how packaging can effectively be used to communicate
tactically to consumers (10 marks)

4(a) Explain the difference between a brand and a product. (5 marks)

(b) How can a marketer differentiate a commodity item such as rice (15 marks)

5(a) Use a suitable model to show how a marketer can identify a market niche
(5 marks)

(b) Describe how a product offering could be developed to fill a niche (15 marks)

6. Critically evaluate the use of the product life cycle model as a guide to marketing
management planning (20 marks)

7. Using appropriate model(s) of products at different stages of their life cycle, show
how understanding of the product Life cycle is of value to marketing
management. (20 marks)

8(a) Draw a model of the product life cycle to show the management decision points
(5 marks)

(b) Explain the options available at each decision point (15 marks)

9(a) State the 8 stages of product/service development (8 marks)

(c) Describe how a new service was launched in your home market using the process
of development (12 marks).

10(a) provide a correctly labeled diagram of the product life cycle (P.L.C) (4 marks)

(b) Briefly describe 4 tactical consideration for the Marketing Mix at each stage of
the PLC (16 marks)

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 CHAPTER ELEVEN
PRICE

Learning Objectives

After completing this chapter you should be able to:-

1. Explain the importance of pricing
2. Distinguish between Penetration pricing and Skimming pricing
3. Show Breakeven analysis and marginal analysis as methods of setting prices.
4. Explain a price war and how it can be avoided.
5. Discuss the different price modification strategies that can be
used.

INTRODUCTION

After producing a Product or service, a price should be set. Price plays an important role
as it may attract or scare away customers, hence there is need for marketers to handle
pricing decisions carefully. Price is defined as money or other consideration for which a
product or service is bought or sold. Among all elements of the Marketing Mix, Price is
the only element that directly contribute to revenue, all other elements contribute to costs.

Pricing Objectives
When setting a price for a product or service it is important to consider what the
organisation wants to achieve with the price.

Pricing objectives include:-

a) Pricing to maximise profits. This is where the organization seeks to achieve high
profits by setting high prices.

b) Pricing to maximise sales volume. This is where the organization seeks to sell as
much units as possible. This is normally achieved by setting a lower price because
under normal conditions the lower the price, the higher the quantity demanded.

c) Pricing to survive. This is where an organisation sets a price that covers and
ensure continued survival of the organisation. This is normally used where a
company is plagued with intense competition, changing customer tastes and
preferences and a rapidly changing environment. In such a case it is important to
forego profits by setting a price that ensures survival.

d) Pricing to kill the product. This is where a price is set to get rid of the product. It
is normally used where a product has reached a decline stage in the product life
cycle. The price is normally a very low price.

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Factors to consider when setting prices

When setting prices it is important to consider several factors which are in two categories
namely Internal factors and External factors.

1) Internal factors
Internal factors are those factors inside the organisation and can be controlled.
These are:-

a) Marketing Objectives
Marketing objectives are important considerations and will guide and determine
the prices to be set. Marketing objectives include profit maximisation, market
share leadership, preventing competition and other objectives.

b) Marketing Mix Strategy

The price set should be consistent with other elements of the marketing mix such
as the design, and quality of the product, distribution outlets to be used and
promotional decisions. For example a High Quality Product suggests a high price
and the use of highly perceived Distribution outlets. In such a case there is
consistence between the price set, quality and the distribution outlets used. For
example high quality clothing may be priced highly and distributed through H.M.
Barbours.

c) Costs
Costs of Manufacturing, marketing, promoting and distributing the products
should be considered in setting a price. The price set should cover all costs and
allow a return on investment. Costs to be considered are fixed costs, those that do
not vary with level of production for example rent, insurance and variable costs,
those that vary with level of production or sales for example direct labour, raw
materials, packaging and others.

2. External Factors
External factors are those outside the organisation and these include:-

a) Level of Market demand

Research should be conducted to determine the customer demand of the product
as there is a relationship between price and demand. Under normal circumstances
the higher the price the lower the quantity demanded and the lower the price the
higher the quantity demanded. Price elasticity of demand, which is the
responsiveness of quantity demanded to a change in price should therefore be
known by marketers.

b) Nature of Market Competition

The nature of market competition determines the prices to be set and the market
structures are pure/perfect competition, monopoly and oligopoly. Perfect
competition is where there are many buyers and sellers trading in a uniform

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 commodity for example bread. In such a situation the seller does not have the
freedom to set the price it wishes. Under a monopoly situation there is one seller
who has the freedom to set the price he/she wants as consumers do not have much
choice and cannot readily shift to other suppliers. Oligopoly competition is where
there are a few suppliers for example petroleum and steel industry. The product is
homogenous and the price set is the same.

c) Competitors Price and Offers

Marketers should also consider prices and other offers of competitors. Consumers
make comparison when shopping hence it is important to consider competitor’s
offers when setting prices.

d) Other factors
In setting prices it is important to consider the factors such as economic factors
and Government regulations. Price controls by Government and Economic factors
such as inflation and interest rates have a major effect on the price, hence these
should be considered as well.

Pricing Methods

Various pricing methods can be used by marketers to set a price for a product or
service. Bearing in mind the different factors that influence and affect pricing
decisions, marketers can use the following pricing methods:

a) Cost Plus Pricing

This is where an organisation adds up all costs (fixed and variable) of the product
and then add a standard mark up which is often expressed as a percentage of the
cost. This method places much emphasis on cost and tend to ignore demand and
competition. Cost – plus or mark up pricing is mostly used because sellers are
more certain about costs than demand of the product/service.

b) Perceived – Value Pricing

This is where a price is set based on consumer perceptions about the value of the
product or service. Much emphasis is placed on perceptions and not costs.For
example the price of a pint of beer is different at Sheraton Hotel, a bottle store in
the high density areas, Beer engine, Boomerang, Live Wire and Star Bar. The
reason for such differences are different perceptions. However if a seller sets a
price that is above the perceived value this will have negative impact on sales.

c) Going Rate Pricing

This is where a price is based on competitors price. More emphasis is placed on
competitors prices and less attention is placed on the company’s costs and
demand. In any market there are market leaders who are followed by smaller
companies. Small companies change their prices when the market leaders change

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 their prices instead of them, the smaller companies changing prices when their
costs change, hence the smaller companies follow the leader.

d) Break-even Analysis
This is where a price is set based on the Breakeven point, that is the quantity
where the firms total cost will equal its total revenue TC=TR. Breakeven analysis
evaluates whether the firm will be able to breakeven that is, cover all its cost with
a particular price. As illustrated in the diagram, below the breakeven point the
firm makes a loss because total cost is higher than revenue. Above the break-even
point the firm makes profit because total revenue is higher than the total cost.

Breakeven
Point

(e) Marginal Pricing

This is where a price is set based on marginal analysis which is based on the
change in total revenue and total cost obtained from selling one more unit to find
the most profitable price and quantity. Marginal Analysis is used when a firm
wants to maximise profits. Since the firm’s demand curve is down slopping an
extra unit can only be sold when the price is reduced. As the price is reduced total
revenue will increase until a certain point when negative marginal revenue will
occur as a result of the lower prices. The price should therefore be set where
Marginal Revenue = Marginal Cost (MR = MC)

Price Modification Strategies

Although an organisation can set a price by using any method, it is important to
adjust or modify prices to suit demand, customer and differences and changing
situations. This is done by using price modification strategies such as:-

a) Geographical pricing
As customers live in different Geographical areas it is important to differentiate
prices through Free On Board (FOB) Pricing and Zone pricing. FOB is when the
seller pays for transporting the product whilst it is in transit. Upon passing of
ownership the buyers will then pay for freight charges. FOB is used for the
convenience of the customer. The farther the customer is the more they pay.

Geographical pricing also include:-

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i) Uniform Delivery Pricing – This is where the same price is charged to all
customers regardless of their location. Essentially it means the seller sells to all
geographical areas at one price.

ii) Zone Pricing – This refers to charging an average freight charge to all customers
within a specific geographic area. For example if the factory is in Harare, all
customers in Bulawayo (Zone), irrespective of where exactly they are, will pay
the same price.

b) Price Discounts
A discount is a reduction on the selling price of a product or service. Discounts
that can be offered to customers include:-

i) Cash Discount
This refers to a reduction on the price of a product for customers who buy on
cash. A cash discount is important because it encourages customers to pay
promptly and thereby reduce debt collection costs in the form of postage and
stationery. For example a television priced at $30 000.00 may have a cash
discount of 10%.

ii) Quantity Discounts

This is a reduction on the selling price for customers who make volume
purchases. Quantity discounts are important as they encourage customers to buy
more from one seller. For example a 20% discount may be offered to anybody
who purchase 50 or more bags of cement.

iii) Functional Discounts/Trade Discounts

These are discounts offered to traders such as wholesalers and retailers to induce
them to perform certain functions such as storage, gathering of information and
many more.

iv) Seasonal Discounts

These are reductions offered to customers for buying products off the season for
example discounts can be offered to customers for buying blankets in September
and October when it is very hot,. Seasonal discounts are important because they
enable the organisation to make sales even when demand is low.

c) Discriminatory Pricing
This is where prices are modified to accommodate customer differences, locations
or product. For discriminatory pricing to be effective it is important to have the
market properly segmented and it should not be made possible for the segment
paying a lower price to be able to purchase and resale the product to segment
paying a higher price. For example the price of one product at TM Stores
Westgate maybe different from the price of the same product at TM Stores
Machipisa Shopping Centre.

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d) Psychological Pricing
This is where Marketers modify prices on the basis of perceived psychological
effect of the price. Psychologically small price differences may suggest big
differences and have an impact on the consumer. For example a T-shirt priced at
$600.00 compared to one priced at $599.00. The actual price difference is $1 but
the Psychological effect of such difference is big.

e) Promotional Pricing
Promotional pricing is when a company’s goods and services are temporarily
priced below the selling price. Forms of promotional pricing include:-

i) Loss Leader
This is when a product is priced lowly in order to attract customers. This is
practiced in most retail outlets where selected items are lowly priced and placed
on display windows to get the attention of potential buyers. When the potential
buyers get in the shop they end up buying other products which should be more
expensive.

ii) Cash Rebates

These are special offers for a given period of time. For example when price for
soaps are reduced for a week only.

New Product Pricing

When a new product is launched there are two main pricing strategies used and these
are:-

a) Penetration Pricing
This is where an initially low price is set to secure market share. It is used where
there is already competition on the market. Setting high prices when there are
rival products may make the company lose sales. For example when the Daily
News was introduced on the market, penetration pricing was used as its price was
$6.00 as compared to the Herald whose price was $8.00.

b) Skimming
This is where an initially high price is set to maximise profits. It is used where
there is no competition and where consumers do not have choice. For example
Net One used the skimming or creaming pricing when they first introduced cell
phones in Zimbabwe.

Price Wars
This is where there is a retaliation in slashing prices by different companies in a bid to out
compete each other. The companies may not secure price advantage but will cut in their
profit margins by low prices. In a price – war situation it is consumers who benefit both
in the short term and long term. It is therefore important for organisations to avoid price
wars by using special offers for a limited period, increasing after sales care, offer
appropriate credit facilities and rewarding loyal customers.

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Summary

The price of a product is an important element of the Marketing mix. If pricing is not
handled properly the organisation may lose customers and profits. In setting price
marketers should consider pricing objective and marketing objective of the organisation.
Marketers should also consider costs and other elements of the marketing mix and these
are internal factors. External factors to be considered include level of market demand,
nature of market competition, competitor prices and offers and other factors such as
Government Regulations and Economic Factors.

Different pricing methods can be used to set the actual price and these include cost-plus,
perceived value, going rate, breakeven analysis and marginal pricing methods. Marketers
may not set a single price but may adjust prices using price modification strategies such
as geographical pricing, price discounts, discriminatory pricing , psychological pricing
and promotional pricing.

In setting prices for new products marketers can use market penetration pricing where
there are other rival products or skimming pricing where there are no competing
products.
Examination Questions

1(a) Explain the difference between price and value

(10 marks)
(b) Show with examples how the same price can be perceived as costly by some
purchasers and as good value by others (10 marks)
2(a) From the consumers point of view, explain how price affect the image of the
product (5 marks)
(b) affects the purchase pattern of a product (5 marks)
(c) adds value to a product (5 marks)
(d) adds value to a service (5 marks)
3(a) What is a price war (5 marks)
(b) Show with an example how a price war can start (5 marks)
(c) Recommend actions to offer better value without starting a price war (10 marks)
4(a) Explain discounting (5 marks)
(b) Give 3 examples to show why an organisation uses discounting as part of its
pricing policy (15 marks)
4 Explain in the context of pricing
(a) Skimming (5 marks)
(b) Penetration pricing and its use (15 marks)
6(a) Describe psychological pricing (5 marks)
(b) Explain how individual customers are affected by psychological pricing (5 marks)
(c) Give and explain 2 examples to show psychological pricing in use (10 marks).

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 CHAPTER TWELVE
PLACE

Learning Objectives

After completing this chapter you should be able to:-

1. Explain what is meant by channels of distribution.

2. Explain the functions of channels of distribution
3. Describe the relationships between cost, control and power in channels of
distribution.
4. Explain the distribution strategies that can be used by manufacturers and where
each strategy is used.
5. Describe and explain vertical and horizontal integration
6. Define Physical Distribution and explain the role it plays.
7. Explain Just-In-Time (JIT) management and its use in distribution.
8. Explain Total Quality Management (TQM) and its importance to an organisation.

Introduction

Producing a good product and setting an attractive price is not enough to yield the desired
level of customer satisfaction. Marketers should ensure that such a good product or
service with such an attractive price is made available and is easily accessible to the
target market. Place or distribution is the function that ensures that goods and services are
available at the right time, right location and in the right quantities. Distribution is
therefore a fundamental part of marketing strategy as it ensures availability of goods and
services.

Elements of Distribution

There are two elements to place or distribution namely channels of distribution and
physical distribution.

1. Channels of Distribution

The channels of distribution are the routes through which products flow from the
producer to reach the final consumer. In other words channels of distribution
refers to the system of marketing institutions through which goods or services are
transferred from the original producers to the ultimate consumers.

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 Functions of Channels of Distribution
Channels of distribution such as wholesalers (Metro and Bhadella) and retailers
(Spar and OK Express formerly Mutomba) perform key functions and these
include:-

(a) Channels of Distribution gather information about customer needs and

environmental factors which is vital in marketing planning. For example Spar
provides information to producers such as Lever Brothers on customer
expectations. Such information is used in decision making

b) Channels of Distribution promote products by disseminating persuasive

communications in the form of adverts and sales promotions. On daily basis
newspapers, radio, television, magazines etc carry adverts from retailers and
wholesalers who give information about products.

c) Distribution channels negotiate with buyers on price, payment terms, credit and
delivery. For example Spring Cabinet, manufacturers of furniture sells to
Pelhams. It is Pelhams who negotiate with buyers to suit their needs.

d) Actual physical distribution or transportation of the product to the final consumers

is effected by the channels of distribution that deliver the goods door to door. For
example furniture retail shops deliver goods to the door.

e) Channels of distribution break bulk products to match products to buyer

requirements. Although Spar Supermarket buy in bulk (cartons) from producers.
Consumers may not buy cartons hence there is need to break bulk that is dividing
bigger quantities into smaller quantities.

f) Accumulating, sorting and assorting are regrouping activities performed by

channels of distribution.
-Accumulating refers to collecting products from many
producers. Different brands of maize from different producers are found at Jarzin
Supermarket.
-Sorting refers separating products into different target groups. Batanai
Supermarket carries bar soaps of different quality levels.
-Assorting refers to putting together a variety of products to
give a target market variety. For example retail outlets carry a variety of alcoholic
beverages.

Number of Channel Levels

Distribution channels can be described by the number of channel levels involved. Each
middleman in the channel constitute a channel level and there are four channels as
illustrated in the diagram.

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0 Level Manufacturer Customer

1st Level Manufacturer Retailer Consumer

2nd Level Manufacturer Wholesaler Retailer Consumer

3rd Level Manufacturer Agent Wholesaler Retailer Consumer

RETAILERS

Retailing refers to all activities involved in selling goods and services directly to final
consumers for their personal use. Retailers are classified according to:-

a) The type of goods sold for example hardware, furniture, grocery, clothing,
electrical products, etc.

b) Type of Service offered

 Self-service where customers shop around without much assistance and it is
usually practiced in supermarkets.
 Limited service – where the customers are assisted because there are more
shopping goods. For example a clothing shop.
 Full service – where customers need total assistance. For example an electrical
shop.

WHOLESALERS

Wholesaling refers to all activities involved in selling goods or services to those who buy
for resale or business use. Because wholesalers deal with business customers rather than
final users, they pay less attention to location and this explains why many wholesalers are
located far away from residential areas.

Types of Wholesalers

a) Merchant Wholesalers
These are wholesalers who take title to the products they sell. Merchant
wholesalers are further classified into full service and limited service. Full service
wholesalers offer credit, delivery and maintains a sales force. Limited service
wholesalers offer limited services and do not deliver and does not offer credit.

b) Agents – An agent facilitate buying and selling and does not take title to the
products. An agent may represent a seller or a buyer. A selling agent is one who
sells a manufacturer’s product and receives commission by performing that
function. A buying or purchasing agent is one who buys on behalf of the principal
who is the buyer. For example one may approach a purchasing agent to buy a
vehicle from Japan on behalf of the principal. The agent will have knowledge
about the Japanese suppliers and also knowledge about the buying procedure,
which the principal might not have.

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c) Sales Branches and Offices
A manufacturer or producer may put in place a sales branch or sales office to
perform wholesaling function. Such an arrangement will enable the organisation
to improve on customer service, selling and establish control on price.

Direct Selling

This refers to selling directly from the producer to the end user without use of
middlemen. Direct selling involves door to door selling and vending machines and it
provides consumer convenience and personal attention to the end user.

Reasons for Direct Selling

a) The need to demonstrate a technical product especially industrial products. For

example it is unlikely to find industrial products in retailers.
b) Lack of active selling by intermediaries and the desire to expand sales. When
intermediaries do not actively sell the company’s product, there is need to sell
directly.
c) Intermediary reluctance to accept new products. When products are new,
intermediaries may not be willing to carry them as they may doubt their
performance. The producer will have to go into direct selling.
d) Unduly high intermediary profit margins which makes the product more
expensive. Each channel member effect a mark up on the product which affects
the final price to customers. If the final price is beyond the reach of customers,
there is need to sell directly.
e) Inability of intermediaries to effect physical transportation. When intermediaries
are not able to physically deliver the product, because of lack of transport and
other resources, direct selling becomes necessary.
f) A small market with only a few target customers will make direct selling cheaper.
When customers are very few, use of middlemen becomes very expensive, hence
there is need to sell directly to the end users.

Reasons for using middlemen

a) Lack of financial resources. Although the middlemen can be eliminated, one can
not eliminate their functions. When any organisation does not have the financial
resources to engage into storage, information gathering, breaking bulk,
transporting the products etc. There is need to use the middlemen who have the
resources.
b) A lack of sufficiently wide assortment of products to sell makes it imperative to
use middlemen. Certain products are related and complimentary, hence customers
would want to buy them at the same time. If a producer have one product and not
the other complementary then use of middlemen becomes effective as the
middlemen carries different products from different producers.

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c) A wide geographic market area makes the costs of direct selling very high. When
an Organisation sells its products in a wide geographic area, use of middlemen
located in different parts of the wide geographic area becomes less expensive,
unlike direct selling which is more expensive as the entire geographic area will
have to be covered.

Franchise

A franchise is when the Franchiser grants a licence to a franchise allowing the name,
logo, process, or service to be used at a fee. Franchise is used when capital investment for
expansion is in short supply or is not available. The franchiser gives advice and assistance
in managing and promoting the name, logo, process or service. The Franchiser develops a
good marketing strategy and the retail franchise holder carry out and implement the
strategy in their unit. In our market situation, an example of franchise are Spar
supermarkets which are owned by different people but using the same name.

Benefits to the Franchiser

The Franchise arrangement brings benefits to the Franchiser and these include:-

a) The franchise is a cost effective strategy of rapid expansion where capital

investment is not necessary.
b) Problems of operating many small outlets are passed on to the Franchisees who
bears the burden of training staff, education, language and culture in the market.
c) Control of the entire large organisation becomes easier as it is done from a central
point.

Benefits to the Franchisee

The franchise arrangement also brings benefits to the Franchisee and these include:-

a) Starting a business is very risky and the use of an established and recognised
brand, name, logo and proven marketing strategies will increase chances of
success.

b) The franchisee is assured of the vested interest of the entrepreneur and enjoys
benefits of full association with large operation.
c) The franchise obtains managerial advice and guidance.

Cost, Power and Control in Channels of Distribution

a) Cost
Various costs are associated with channels of distribution and these include
physical distribution costs, training of channel members, (dealer support),
incentives to channel members which include discounts. The greater the number
of channel levels or channel members the more costs incurred.

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b) Power
In the context of distribution, power refers to the ability to influence. It is obtained
through size, sales volume, competitiveness, profitability, efficiency and good
reputation. A powerful retail outlet can therefore dictate terms to the supplier or
producer. For example OK Bazaars is a powerful outlet which has the capacity to
dictate terms to FMCG suppliers such as Olivine Industries, Lever Brothers,
National Foods, Blue Ribbon Foods, Colcom, Dairiboard (Pvt.) Ltd and many
more.

c) Control
Control refers to the maintenance of the desired degree of legal control over the
channel members especially in terms of the product and price. The greater the
number of level in the channel the less control is exercise by the producer on
quality and price. If the producer wants to exercise more control on the product,
price, and other factors then there is need to use a shorter channel.

Factors to consider when selecting channel members

It is important to select the appropriate channel member to carry an organisations

products and the factors to consider in choosing channel members include:-

(a) Experience of the intermediary – it is important to use a middlemen who has

experience and expertise in handling the product you sell.
(b) Other lines of products carried by the middlemen. Different middlemen carry
different line of products and it is important to use a middlemen who carry the
same lines of products as yours.
(c) Growth and Profit Record – The growth and profit record of a middlemen is a
reflection of the support and patronage the middlemen receives from consumers.
For example OK Bazaars has established many outlets in high density and low
density areas and this is a clear indication of which OK Bazaars has grown. More
importantly it means OK Bazaars is making huge profits which it is now investing
by putting in place many outlets. Marketer should therefore use middlemen with a
growth and profit record.
(d) Reputation – Marketers should select middlemen who has a good reputation in
customer service and a good image.
(e) Co-operativeness – co-operation between the producer and the middlemen plays
an important role to the success of the business, hence this should be considered
in selecting channel members.

Channel Selection

The organisation must decide how many outlets should be established in an areas and the
decision depends on the type of the product and the ideal market exposure. Ideal market
exposure refers to making a product or service available wide enough to satisfy needs of
target customers but not exceed them. Too much exposure will lead to unnecessary more
costs. Three strategies of distribution exposure are:-

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a) Intensive Distribution
This refers to selling a product through all responsible and suitable outlets. The
aim is to cover the market as intensively as possible. This channel network is used
for goods and services that consumers frequently purchase. For example Olivine
Industries use intensive distribution. However the purchaser does not have much
control over the outlets.

(b) Selective Distribution

This refers to selling the product in more than but less than the number of outlets
and only to those who give the product special attention. For example some
clothing manufacturers use Selective Distribution where their clothing is carried
by H.M Barbours, Greatermans, Meikles and Truworths and not all clothing retail
outlets.

(c) Exclusive Distribution

This refers to selling through only one middlemen in a particular geographic area.
Exclusive Distribution restricts the number of outlets by granting exclusive rights
to certain outlets so as to be able to control process and the service offered. It is
used in a number of circumstances such as where a company wants to encourage
high quality image, where there is a high degree of service or after-sales support
and where the producer requires more control on the marketing mix. For example
manufacturers of motor vehicles use exclusively distribution. A particular
middlemen will sell Toyota vehicles only.

Integration

This refers to the acquisition or control of firms at different levels of channel activity.

Vertical Integration
This is where the producer acquires firms at different levels of the channel activity. The
producer will acquire or control retail Outlets. For example Bata Shoe Company produces
shoes and operates retail outlets nationwide.

Advantages
i) The elimination of middlemen allows the company to sell at lower prices and
thereby make more profits. In Zimbabwe Bata Shoe company has positioned itself
as the best in offering affordable shoes.
ii) There is improvement of customer service as the producer deals directly with the
customers.
iii) There is stability of operations and there is assurance of supplies.

Disadvantages
i) A company may not have the capital, resources and expertise to extend its
activities into distribution and selling to customers.

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ii) Other retail organisations now in competition may refuse to buy the company’s
products. For example Cuthberts Shoe retail outlet may refuse to carry Bata Shoes
because Cuthberts will be competing with Bata retail outlets.

a) Horizontal Integration

This is where two or more distribution outlets at one level join together and
become a unified force to follow a new marketing opportunity. For example OK
Bazaars acquired Mutomba supermarkets a competing retailer.

Advantage
There is a combination of marketing resources, skills expertise and production
capabilities.

Disadvantage
Such arrangements disadvantage customers as they reduce competition and harms
customers. In other countries such as the United States such arrangement are
illegal.

2. PHYSICAL DISTRIBUTION
Physical Distribution refers to the planning, implementing and controlling of
physical flows of material and final goods from points of origin to points of use.
Selecting the appropriate channel of distribution is not enough to meet customer
needs, but more importantly marketers should ensure that the, goods are available
at the right time, in the right quantities and this is achieved through Physical
Distribution management. Physical distribution involves the following major
issues:-

(a) Order Processing

Physical distribution begins with the customer placing an order, which has to be
processed. Prompt and efficient processing of the order is therefore important to
ensure that goods are made available to the customer at the right time.

(b) Warehousing

This refers to the storage of goods before they are sold. Warehousing is important
because the production rate can not match the consumption rate. More is produced
per day than what is consumed per day, hence the need for warehousing.
Companies such as National Breweries and Coca Cola own warehouses in
different parts of the country and this ensures a high level of customer service. A
company can own a warehouse and this ensures more control. If it does not have
the resources then it can rent a warehouse.

(c) Inventory
This refers to the level of stock that can be maintained at a given period. The
organisation should have enough stock to fill all customer orders immediately and

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 marketers are faced with decisions such as how much to order, and when to order.
Recent developments in Information Technology and the use of it in retailing has
enabled companies to reduce stockholding costs eg. electronic data interchange
which links suppliers and their sales forecasts and thereby reduce inventory costs.

Just in Time (J.I.T) another development is a system of Inventory Control which

delivers inputs only at the time and rate they are needed. J.I.T reduces inventory
costs by maintaining stock level at the minimum required level, focuses on
instantaneous production, perfect quality, streamlines delivery, adds effectiveness
and efficiency to delivery and adds value to the chain. Implementation of the JIT
system requires training of all staff and adopting total quality management (TQM)
a management approach in which everyone in the organisation is concerned about
quality at each stage of the manufacturing process and throughout all the firm
activities to better serve customer needs. With TQM all internal systems should
strive towards the goal zero defects.

More importantly Total Quality Management (TQM) involves the continuos

improvement in quality, productivity and effectiveness which is obtained by
establishing management responsibility for processes as well as outputs.

(d) Transportation
Transportation is an important aspect of physical distribution because
transportation decisions affect pricing of products, conditions of goods when
arrive and the time they arrive. If transportation is not handled properly, stocks
can build up, inventory costs rise and customer service will be affected adversely.

There are five main modes of transportation and marketers must choose the most
suitable method for the product in question. The five main types are as follows:-

i) Rail – Suitable for shipping bulk for example coal.

ii) Water – normally the slowest, but low costs in-terms of shipping bulk. Because it
is slow, it is not an appropriate mode for transporting perishables.
iii) Road – can affect door to door delivery, and is highly flexible in routing and
timetables.
iv) Pipeline- a specialised way of shipping fluids such as petroleum and chemicals.
v) Air – very fast and can reach distant markets. Airfreight
is expensive and may be used to transport perishables such as Fresh products and
is also used to transport precious commodities such as gold.

Criteria for Choosing mode of transport

In choosing which mode of transport to use, marketers should assess each mode using the
following criteria.
i) Speed - how fast or slow is a particular mode.
ii) Frequency- How often does the mode travel. For example how many times does
Air Freight or rail transport go to South Africa.

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iii) Dependability - How dependable is a particular mode in transporting a particular
product. For example is road dependable for transporting precious commodities
such as Gold?
iv) Capability – How capable is a particular mode in transporting a particular
product.
v) Cost – What is the cost of a given mode in transporting a particular product.

Summary

Distribution is an important element of the marketing mix as a it ensures availability of

goods and services to the target group. Effective distribution will ensure a competitive
edge over competitors, hence marketers should pay specific attention to distribution. Two
elements make up distribution and these are channels of distribution and physical
distribution.

Channels of distribution are the routes through which goods move from point of origin to
where there are used. Channel members include wholesalers, retailers, agents and other
players who act as intermediaries. Channels of distribution provide a vital link between
the organisation and its customers. These intermediaries perform important functions
such as gathering information, promoting products, negotiations, transportation, breaking
bulk, accumulating, sorting and assorting products.

Organisations make use of distribution strategies such as intensive, selective and

exclusive strategies. As marketers select which distribution strategy to use they should
consider cost, power and control. Marketers should know that the longer the channel the
more cost, the popular the channel member is, the more powerful it is and the longer and
wider the channel the less control the manufacturer has.

In selecting which channel member to use marketers should consider, experience of the
intermediary, other lines carried, growth and profit record. Reputation and co-
operativeness of the channel member.

In distribution, the manufacturer can also use vertical integration, a strategy, which
involves acquisition of retail outlets, and thereby eliminate independent middlemen.
Horizontal integration is another strategy used in distribution outlets at the same level.

Physical Distribution involves the actual movement of goods. Major factors that facilitate
actual movement of goods from point of origin to where there are used include order –
processing, warehousing, inventory and transportation. Conclusively distribution/place is
an important aspect of marketing as it ensures easy accessibility and availability of goods
and services to the consumer.

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EXAMINATION QUESTIONS

1(a) Describe Just in Time Management [5 marks]

(b) Use examples to illustrate the use of JIT procedures [15 marks]
2(a) Evaluate the relationship between cost, control and power in channel distribution
[10 marks]

(b) List and briefly explain 4 major developments in distribution [10 marks]

3. Show how the knowledge of segmentation techniques is important when selecting

channels of distribution. [20 marks]

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 CHAPTER THIRTEEN
PROMOTION

Learning Objectives

After completing this chapter you should be able to:-

1. Identify and explain the elements of the promotional mix.
2. Discuss the communication process and its relevance to marketing
3. Explain the AIDA model and its significance to marketing communications.
4. Distinguish between above-the-line media and below the line media.
5. Discuss the role of advertising in the promotional mix.
6. Discuss the role of sales promotion and identify the sales promotional tools
7. Explain the push and pull strategies.
8. Distinguish between Public Relations and Publicity.
9. Explain the role of Public Relations in Crisis Management.
10. Discuss the role of Personal Selling in the promotional mix.
11. Explain Direct Response Marketing and how it can be used.

INTRODUCTION

Promotion is a key element in the marketing mix. Marketers understand that if consumers
are left alone they will not buy enough of the company’s products or services, hence there
is need to directly influence consumer’s minds and the decision they make through
promotion which is often referred to as the communication mix or the promotional mix.
When an organisation develops a good product (Product) that is well priced (price) and
made available (place) then marketing should communicate with its customers
(promotion). In simple terms promotion is communicating, information between a seller
and potential buyer(s) and other players in the channel to influence attitudes and
behaviour.

Promotional Mix

The promotional mix consists mainly of advertising, sales promotion, personal selling
and public relations and publicity.

Promotional Mix

Advertising Sales Personal Public

Promotion Selling Relations &
Publicity

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Promotion Objectives

It is important for an organisation to clearly define what it wants to achieve with

promotion and there are three basic promotional objectives namely:-

1) Informing – This refers to informing, telling about the product/service.

Consumers must know something about the product for them to purchase it.
2) Persuading – This refers to offering reasons why consumers should select your
brand and it is used when there are rivals brands on the market. It is not enough to
simply inform when there are competing rivals, hence there is need to persuade.
Persuading is normally used in the competitive stage of the product life cycle to
build selective demand.

3) Reminding – This refers to making consumers to keep thinking about the

product/service. Consumers should be reminded on how good the brand is and
about past satisfaction so that they do not shift to competing brands.

The Communication Process

Communication is the process of transmitting information so that it is understood and

acted upon. As marketers are communicators who communicate with consumers they
should understand how communication works. Marketers should understand
communication in the context of marketing as illustrated in the diagram.

Model of Communication Process

Noise

Sender Encoding Message Decoding Receiver

Medium

Feedback

From a marketing perspective the sender is the marketer who initiates a message by
encoding that is putting thought into symbolic form. In encoding it is important to
express a message in a form that can mostly likely be understood or that is welcome to
the receiver. Encoding is the use of signs, colour, pictures, voice, words, music etc. For
example in an advert entitled “The Naked Truth” Net One used a naked man. A symbol
that was received with mixed reactions by Zimbabweans. The message is a symbolic
expression of sender’s thought e.g. the advertisement. The message should meet

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identified needs of the target audience. The medium refers to the communication
channels through which the message moves from sender to receiver for example radio,
television, newspapers and magazines. Marketers should use media that cost effectively
reaches the target audience. Decoding is the process through which the receiver assigns
meaning to the symbols encoded by the sender, that is interpreting the meaning of an
advertisement. A message should be decoded in the exact form intended.

Noise is the extraneous distracting stimuli that interfere with the reception of the message
in its pure and original form. There will always be noise along the channel and a message
should contend with the extraneous distracting stimuli. For example all other messages
that scramble for attention are noise. The receiver is the party receiving the massage for
example the consumer. Feedback is part of the receiver’s response communicated back
to the sender. Feedback enables the sender to monitor how well the message has survived
the journey along the channel, whether it has impacted upon the receiver negatively or
positively, whether it has been decoded accurately and whether any intended action has
been instigated.

Promotional Planning
As discussed previously in (Consumer behaviour) the adoption process refers to the
stages through which a consumer goes through from first hearing about an innovation to
final rejection or adoption. The stages are awareness, interest, trial, evaluation and
adoption/rejection. These stages guide promotional planning as the promotion objectives
of informing, persuading and reminding relate to the stages in the adoption process. The
marketer has a task to assist the consumer to go through the stages in the adoption
process and the decision making process and this can be achieved by using an action
oriented Model called AIDA. In developing an integrated promotional Campaign
marketers can make use of the AIDA model.

A - getting Attention
I - holding Interest
D - Arousing Desire
A - Obtaining action

a) Getting Attention – This is necessary to make consumers aware of the

company’s products. Marketers make use of attention – getting devices such as
large deadlines, shocking statements, pretty women, handsome men etc.
b) Holding Interest – Holding interest will give communication a chance to build
the consumers interest in the product/service. A message should hold and
maintain interest.
c) Arousing Desire – The desire to own or use the product must be aroused in the
consumer. In this regard marketers should convince the consumer that the product
meets consumer needs. Marketers should point out the unique selling preposition
(USP) an advantage that consumers cannot obtain from competing brands. The
U.S.P should aim at an important unsatisfied need.

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d) Obtaining Action – The ability of the promotional message to lead the consumer
to try the product is a major requirement. Obtaining action means gaining trial of
the product.

ADVERTISING
Definition Advertising is defined as any paid form of non-personal presentation and
promotion of ideas, goods or services by an identifiable sponsor.

Purpose: The purpose of advertising is to communicate to customers and potential

customers by drawing their attention to the characteristics of an organisation or a product
or service which will appeal to their buying motives.

Objectives
a) Communicating certain facts about a product.
b) Highlighting specific features of a product that separates it from competing
brands.
c) Building up a brand image or corporate image.
d) Changing customer and consumer habits for example adverts about AIDS,
drunken driving, cigarette smoking etc.
e) Influencing dealers and resellers to stock the organisation’s products.
f) To create awareness of new products and to generate enquiries from potential
customers.

Media Selection
A decision should be made on the media that carries the message. Two key concepts are
important when selecting media and these are:-

(a) Reach- The number of people exposed to the particular medium through which the
message is presented. For example the Daily News, Herald, Financial Gazette, Radio
1,2,3 and 4 have different reach. Marketers should know reach of a particular medium
before they select it.

(b) Frequency – The number of exposures in a given period.

Media Characteristics
Characteristics of each media should be known so as to select the appropriate one.
a) Newspapers

Advantages
1. Good market coverage 2. Broad acceptance 3. Timeliness

Disadvantages
1. Short life 2. Poor reproduction quality

(b) Television

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Advantages
1. Combines sight, sound and motion
2. Appeals to these senses.

Disadvantages
1. High Cost 2. High Clutter

(c) Magazines

Advantages
1. Good pass – along readership
2. High demographic selectivity
3. High quality reproduction

Disadvantages
1. Long – lead purchase time.

(d) Direct Mail

Advantages
1. Audience selectivity
2. No advertising competition with the same media.

Disadvantages
1. Relatively high cost.

(e) Outdoor (Bill boards, bus shelters etc)

Advantages
1. High repeat exposure 2. Low cost 3. Low competition

Disadvantages
1. No audience selectivity 2. Creative Limitations

(f) Radio

Advantages
1. Mass use 2. Low cost 3. High geographic and Demographic Selectivity

Disadvantages
1. Audio presentation only 2. Low attention than television.

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Above and Below the line
Above the line is advertising in media, which pay commission. The media pays
commission on purchase made by the advertising agent. Mass media such as radio,
newspapers, television and cinema are example of above the line.

Below the line is advertising in media where there is no payment of commission for
example exhibition, direct mail, point of sale etc.

Through the line is when a campaign is planned using above the line media linked to
below the line activity. In other words there is a combination of above and below the line
for example advertising on television will be linked to point of sale displays and both will
portray the same theme.

Evaluating Advertising Effectiveness

Marketers should ensure that they derive benefits from advertising hence, there is need to
find out whether a company’s advertising is effective. Measuring advertising
effectiveness is done in two ways.

a) Measuring communication effect – This refers to determining whether the

advert is capable of communicating effectively. Marketers should know the
capability of an advert to deliver the desired communication effect. In this regard
marketers use pre-testing and post testing.

i) Pre-testing – refers to assessing effectiveness on actual media. Before the advert

is on National Television it has to be exposed to a certain group of the target
audience to determine its effectiveness.

ii) Post-testing – refers to assessing effectiveness of an advert after it has been

printed or broadcast. Research is conducted on the number of consumers who
remembers the advert and what exactly they remember.

(b) Measuring Sales Effect

This refers to establishing sales generated by the advert. The level of sales
generated will show how effective or ineffective the advert has been. However
sales effect is difficult to measure as sales are not influenced by the advertising
alone, but other factors such as price, availability and competitor actions also
influence sales.

2. SALES PROMOTION
Definition – A sales promotion is defined as the provision of short term
incentives to encourage the purchase or sale of a product or service.

Purpose - The purpose of a sales promotion is to support marketing activities in

persuading and motivating customers to buy.

Objectives – Sales promotions have various objectives, which include.

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a) To encourage product trial. For example the New Africa Online Internet and
email on television without a computer. They were offering an introductory 6
months free e-mail and Internet to encourage product trial.

b) To encourage more frequent or greater use of a product. For example the Lever
Brothers “Knock Knock what have you got" sales promotion. It encourages more
frequent use of Lever Brothers products.

c) To increase the number stockists. For example when producers offer discounts to
wholesalers and retailers for a specific period to encourage more of them to stock
the producers products.

d) To increase awareness of a product. For example :Great Stores Draw Sales

Promotion” between 24 November and 31 December 2000. CW Store, Radio Ltd,
Blooms and Creative World offered “Fantastic Prizes” to lucky customers who
purchased any Panasonic products.

(e) To encourage seasonal sales. For example prizes offered to customers who buy
blankets between August and October, a period when demand for such products is
low.

(f) To encourage brand switching. For example where marketers offer incentives to
consumers to encourage them to switch to their brands.

(g) To increase sales in a new market segment. For example the new TM outlet at
High Glen Shopping Centre offered special offers” on The Grand Opening.

Promotional Strategies
Organisations should communicate with the final consumer, public retailers and
wholesalers to ensure its products are promoted effectively. To achieve effective
promotion two promotional strategies are used namely:-

a) Promotions with a Pull Strategy/Pull effect – Pull techniques are aimed at

consumers to arouse their interest in the product. Such interest is communicated to
the retailers by making enquiries. Retailers will thereby be forced to increase
stocks, thereby “pulling” the products from producers as illustrated in the
diagram.

Producer Wholesalers Retailer Consumer

b) Promotions with a push/strategy/push effect – Push techniques are aimed at

traders or channel members to induce them to order and stock and sell the
products. Essentially the products are “pushed” through the distribution channel
as illustrated in the diagram.

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Producer Wholesalers Retailer Consumer

However both push and pull techniques have a range of advantages and disadvantages
associated with them as shown in the table.

Push Strategy
Advantages Disadvantages
-more self space gained -there is no contact with the consumer
-distributor co-operation is -high costs involved and profits enhanced
are reduced
-they educate distributors
-good relationships with
distributors are established.

Pull Strategy
Advantages Disadvantages
-Build brand image -High costs involved
-Create rapid brand awareness -There is no trade support
-Maintain customer loyalty.

Types of Sales Promotions

The types of sales promotions are:-

a) Consumer Promotions
b) Trade Promotions
c) Sales Force Promotions

a) Consumer Promotions - These are aimed to consumers to encourage more

frequent buying or faster usage and to encourage trials of other brands. Consumer
promotions are:-

i) Coupons – A coupon is a certificate entitling the bearer to a stated saving on the

purchase of a specified product. It could be attached on the product or published
in newspapers or magazines.

ii) Competition – This is where consumers are requested to send tokens or proof of
purchase and this induces more sales. However a competition should be simple to
enter and should not run over a long period of time that contestants become bored
and forget to submit entries.

iii) Free Samples

These are free products given to consumers in stores by point of sale.
Demonstrators or are delivered to the door. Sometimes samples are attached to
magazines.

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iv) Self Liquidating offers
This refers to an offer, which is self supporting. A product is often offered free as
an incentive to buy the main product. For examples a three quarter bed being
offered free for buying a double bed. Such an offer brings extra sales so that the
increase in sales and profits (from selling the bed) will liquidate (pay off) the cost
of the bargain offer (three quarter bed).

(v) Multiple Packs

This is where small items are collectively packed or sold in multiples. For
example instead of buying two bath soaps one buys several as these will be
packed in threes or fours in single packs.

(vi) Banded Packs

This is where related or complimentary products are packed or sold together. For
example a tooth brush and tooth paste, ruler and a pen.

(vii) Price Cutting

This is where consumers are offered savings off the regular price of a product. For
example “Prices reduced by 50%”.

(viii) Point Of Purchase

This is where the product is presented and promoted in the location where it is
sold. Effective displays sells the product as they attract more attention and assist
the customer in making the final choice.

(b) Trade Promotions

These are aimed to encourage traders to hold larger stocks, carry stocks of new
products or to gain entry to new retail outlets. Trade promotions are:-

i) Buying allowance – This refers to a reduction on price on each pack or case of

products purchased during a period of time. This encourage traders to stock more.

ii) Advertising Allowance – This is used to compensate dealers for advertising a

manufacturer’s product. As OK Bazaars advertise products, producers should
assist OK Bazaars by offering advertising allowance as an incentive..

iii) Display allowance – This refers to offering incentives to dealers for carrying out
special displays of products. For example during the OK Grand Challenge various
special stands are designed for products from specific organisations, Olivine
Industries, Cairns Foods, Colcom, National Food etc.

iv) Free goods - This refers to offering extra cases of goods to middlemen to
encourage them to feature the producer products.

v) Push Money – Dealers or their sales force should be incentivised to push the
producers products and this may be done by offering them gifts or cash.

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c) Sales Force Promotions - These are aimed at company ‘s own sales force and
the objective is to encourage support for a new product, encourage salesmen to
prospect for new customers or to stimulate sales in a slack period. Incentives will
boost the morale of the sales force. Sales force promotions are:-

(i) Sales Contests/Competition – As an incentive competitions among sales persons

are used to motivate them. For example sales persons may have the chance to win
a trip to Mauritius if they manage to sell certain amount of goods of a certain
value.

ii) Periodic Conferences – regular meeting and conferences between Sales

Managers and sales people are a motivating factor as need and problems of sales
people are discussed and new sales techniques are learnt.

iii) Bonus Schemes - Performance related bonus schemes are an incentive and are
aimed at sales people for percentage increase achieved above sales products
targets. Rewards may be in cash or in kind.

3. PERSONAL SELLING

Definition - Personal selling is defined as one to one communications with a

buyer, which is made directly or over the phone or through other forms of
electronic communications.

Purpose – The purpose of personal selling is to change individual attitudes,

demonstrate the product, persuade, assist the potential buyer and deliver a
package of benefits to the buyer.

Objectives – Objectives of personal selling include:-

a) To change personal attitudes towards the product and establish conviction in the
mind of the would be purchaser.
b) To encourage and facilitate the actual purchase decision and action.
c) To reassure the customer that he/she has made the right decision to purchase the
product.

Steps in the Selling Process

i) Opening the Sale – One’s personal appearance, manners and behaviour and show
of respect create favourable initial responses from the prospective buyer. One’s
opening remarks are also important.

ii) Identifying customer needs and problems – The Sales person should identify
needs, wants, problems and requirements of the prospective buyer before they
make an attempt to sell the product.

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iii) Presentation and Demonstration – having identified needs and problems of the
prospective buyer, the sales person should present an offer that best fit customer
needs and provide a solution to prospective customers problems. Product attribute
and benefits should be communicated to the prospective buyer.

iv) Dealing with Customer Objections - During presentation the prospective buyer
may object to certain aspects about the offer. Such objections are an indication
that the prospect is not convinced. In dealing with objections the sales person
should treat them as requests for additional information and clarification.
Objection handling techniques should be used.

v) Negotiating the terms of the sale – At this stage, negotiations on price, delivery,
credit terms, discounts and trade-in are done. However the discretional power to
negotiate depends largely on company policy. However negotiation becomes
easier if the seller knows competitor’s offers and buyer’s needs.

vi) Closing the Sale

This refers to asking for the order and the Sales person should take the initiative to
close the sale if the buyer does not ask for the product. Proper timing and use of
the appropriate closing techniques is therefore important.

vii) Follow-up
After the customer buys, there is need to follow-up and this is vital as this will
persuade customers to make repeat purchases. More importantly follow-up
ensures proper use of the product and thereby facilitates customer satisfaction.

Functions of the Sales Manager

(i) Setting sales objectives and strategies.
(ii) Recruiting and selection of sales people.
(iii) Motivating sales force.
(iv) Sales force organisation and this includes deciding on the size of the sales force,
territory design and planning.
(v) Training of the sales force.
(vi) Evaluation and controlling of sales activities and the sales force.
(vii) Preparing the sales budget.

4. PUBLIC RELATIONS AND PUBLICITY

Public Relations – Is defined as the deliberate planned and sustained effort to
establish and maintain a mutual understanding between an organisation and its
publics.
Purpose – The purpose of public relations is to present a positive image of the
organisation to publics such as shareholders, customers, government, employees,
suppliers etc and to promote understanding. Public Relations has a responsibility
to inform, educate and avoid unfavourable news coverage especially in times of
crisis. Public Relations should turn minds from a negative state to a positive state
through what is referred to as the Transfer Model.

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 TRANSFER MODEL

NEGATIVE STATE POSITIVE STATE

HOSTILITY SYMPATHY

PREJUDICE ACCEPTANCE

APATHY INTEREST

IGNORANCE KNOWLEDE

The transfer model illustrates the role of PR in times of disaster or crisis.

(i) In times of a crisis in an organisation, Hostility occurs in the various publics,

which may be a result of missing information. In such a case there is an urgent
need to satisfy the public’s desire for information so as to convert hostility to
sympathy.
(ii) Converting prejudice into acceptance in a crisis situation is very important. The
situation may be handled well and communicated through effective PR, which
lessens prejudice.
(iii) Changing apathy to interest is also crucial in times of crisis. Apathy towards the
organisation develops and tactical and effective PR should change apathy to
interest.
(iv) Changing ignorance to knowledge is of particular importance in a crisis to enable
publics to know exactly what has happened, how it has happened, where it
happened, whether it would happen again and the long term implications. The
company should speak with one voice and avoid conflicting statements.

Public Relations Techniques

As PR is a long term effort by the organisation to improve or sustain its image, various
techniques are used and these are as follows:-
(i) organised visits to the company
(ii) Sponsorship
(iii) Community projects
(iv) Company publication and this include annual reports
(v) Press releases
(vi) Community meetings

(b) Publicity
Publicity refers to information appearing in the media, which is concerned with
products / services, or the company and is secured as editorial rather than paid –
for space. Publicity is an effective communication tool as it lessens the effect of
negative news and is seen as a truthful and credible source of information.

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Other Promotional Activities

a) SPONSORSHIP - Defined as financial patronage given to individuals,

participants, events, commercial TV and radio programmes and other activities by
commercial organisations. Sponsorship is an effective and significant technique
where a company decides to sponsor certain events. Marketers should give serious
consideration to the inclusion of sponsorship in the mix when deciding on the
Integrated Marketing communications. Typically sponsorships are directed
towards sport, arts and culture, music, education, environmental issues and other
good causes. Examples are Madison sponsoring the soccer league, Net one
sponsoring the Zimbabwe open golf tournament, Jewel Bank sponsoring sports
news on television etc.

Benefits of Sponsorship – The primary benefit from a sponsorship is brand

building where a company makes concerted efforts to build a strong brand. The
benefits of a strong brand are:
i) it reduces competition
ii) it increases customer retention
iii) it creates a platform for other products, which can ride on the success of the
strong brand.

Purposes of Sponsorship – The purpose of sponsorship can be looked at from three

perspectives namely:-

i) Advertising – Sponsorship may be aimed directly at promotional purposes to

raise awareness levels in their products. For example when Econet Wireless
sponsored live coverage of the World Cup in 1998 and 2002 there was constant
mentioning of the sponsor and their products and this created a lot of awareness.

ii) Marketing - It may be a company’s marketing policy to associate a company’s

product or service with certain demographic groups by sponsoring activities
which interest them thereby positioning a product or brand by sponsoring an
interest associated with a certain specific market segment. For example
Dairiboard (Pvt.) Ltd, sponsoring athletics, Coca-Cola sponsoring “Coke on the
beat” musical programme.

iii) Public Relations – Sponsoring may be directed at creating goodwill, establishing

good reputation and understanding, showing responsibility or providing a service.

b) DIRECT – RESPONSE DATABASE MARKETING

Definition
Direct - Response Marketing is defined as selling goods and services direct to
customers in response to orders produced by direct mail, catalogues, press,
television or other advertising. Direct Response Marketing goes direct to an
identified person or household and creates a direct exchange of information and
response between two parties.

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Forms of Direct – Response Marketing
i) Telemarketing – This refers to using the telephone selling directly to customers.
Telemarketing saves time and money and is useful when the market is small or
when customers are in hard to reach places.
ii) Direct Mail – This involves single mailings that include letters, advertisements,
samples etc send directly to consumers. Direct mail is effective as it goes direct to
the intended target market and more importantly direct main adverts are read
more that those in mass media as newspapers, magazines, television or radio.
iii) Catalogue Marketing – A catalogue is a list of items or products by an
organisation and catalogue marketing refers to selling through catalogues.
Catalogues can be mailed to consumers, made available through newspapers or in
shops. For example Pelhams use catalogue marketing as they insert catalogues in
newspapers.
iii) Television Marketing – This refers to advertising on television or giving
information about goods and services on television and then ask consumers to
respond directly to the company by phoning a given number. Television
marketing takes two forms namely Direct Response Advertising where
customers dial telephone number and place orders after an advert and Home
Shopping Channels where an entire television station or program is dedicated to
selling of goods and services.

Benefits of Direct – Response Marketing

Direct - Response Marketing entails buying and selling without the use of shops or retail
outlets and its benefits are:-
i) Shopping is made convenient – There is convenience to customers as they
respond to direct mail by placing orders and receiving products at home. It saves
time as customers do not leave their homes.
ii) The seller can build close and continuos relationships with each other through
regular mailing which update customers on the latest offers.
iii) There is privacy to the seller as competitors are not in a position to see the sellers
tactics and strategies.
There is high response rate as marketing efforts are directed to individuals. More
importantly Direct Response Marketing offers easy response measurement as
results are direct and immediate unlike when they buy from retailers.

(c) DATABASE MARKETING

A customer database is an organised set of data about individual customers or
prospects, which the company can use to sell products and services and maintain
customer relations. Insurance companies, building societies, producers maintain a
customer database. A customer database contains information about each
customer. Information categories contained in the customer database include:-

i) Basic information – name, address and telephone number.

ii) Personal details – age, gender, occupation, type of housing, income etc.
iii) Transaction data – frequency of purchase, time of purchase, credit cards, how
and when the customer pays.

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Benefits of Database Marketing
A rich customer database contains vital information, which makes it possible for
marketing efforts to be directed to individuals. The benefits of such a marketing approach
are as follows:-
i) Locating good prospects – As information contained in the database shows
frequency, time, payment loyalty and value of business customers bring to the
organisation, it is easy to identify new opportunities and thereby achieve a
competitive position in the market.
ii) Increased understanding of customer needs from the information available in the
customer database. Marketers are in a position to monitor and understand
consumption patterns, resulting in them anticipating future customer needs.
iii) Improved quality of information flow for marketing planning. Marketers use the
information from a customer database for purpose of marketing planning and this
results in the formulation of effective tactics and strategies to achieve set
objectives.
iv) More efficient development of the Marketing Mix for targeted segments. Detailed
information about customers will enable development of a tailored marketing mix
to suit each targeted segment.

Summary

Promotion is an integral and fundamental element of the Marketing Mix, which ensures
communication between an organisation and its customers and other relevant groups. For
marketers to be effective communicators they should know the communication process,
that is understanding how messages are conceived and transmitted from one source to
another party.

Promotions consists of Promotional Mix elements namely advertising, sales promotion,

personal selling, public relations and publicity. Advertising informs consumers about
products or services with a view to make them buy. Selection of the proper and suitable
media is important for advertising to be effective and marketers should understand
characteristics of each media. Measuring advertising effectiveness is important to ensure
that the organisation does not waste resources and to achieve this marketers use
communication effect research and sales effect research.

Sales promotions are incentives used to motivate buyers into action. The incentives are
targeted to consumers, traders and the sales force to induce them into action. Personal
Selling is another promotional mix element that provides face to face interaction between
the seller and the potential buyer. Public relations is also important at is ensures mutual
understanding between the organisation and its various publics.

However organisations also make use of other promotional activities such as sponsorship
and Direct – Response Marketing. The bottom line is that in developing an integrated
promotional programme marketers should give serious consideration to all promotional
mix variables namely:- advertising, sales promotion, personal selling, public relations and
publicity, sponsorship and Direct-Response Marketing.

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Examination Questions

1(a) Explain the importance of AIDA to marketers (5 marks)

(b) Show how marketers are guided by AIDA when creating an integrated
promotional campaign (15 marks).

2(a) What is the purpose of sales promotion (5 marks)

(b) Using current examples illustrate 3 sales promotional campaigns, each of which
has different objectives (15 marks).
3(a) Explain why, when creating advertising campaigns, there is no difference
between a product and a service. (8 marks)
(b) Use 2 examples to show how sales promotions may support a product (6 marks).
(c) Use 2 examples to show how sales promotions may support a service (6 marks).

4. Explain with examples each of the following

(a) Push strategy (5 marks)
(b) Pull strategy (5 marks)
(c) Self-liquidator (5 marks)
(d) Above the line (5 marks)
(e) Sponsorship (5 marks)
(f) Banded Pack (5 marks)

5. You sell your products through intermediaries and are dependent upon them for
the conversion of enquiries into Sales. List and explain the action you take to
maximise Sales. (20 marks
6(a) Why do identical product or services need different promotional mixes when sold
into different market segments (8 marks)
(b) Choose two products or services that are sold into different Market segments.
Compare and contrast their promotional mixes and comment on any similarities
and or differences (12 marks).
7. Write a report to your Managing Director highlighting the main differences
between advertising and public relations and the type of activities they are each
likely to perform (20 marks)
8. Explain how Public Relations is useful to an organisation when Market conditions
are
(a) extremely bad (10 marks)
(b) extremely good (10 marks)

9(a) Describe with suitable example the differences between customers and consumers
(5marks)
(b) Explain the elements within the communications mix (5 marks)
(c) How can the communications mix reinforce the process of selling to the customer
(15 marks).

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 CHAPTER FOURTEEN
THE SERVICE MARKETING MIX (3Ps)

Learning Objectives

After completing this chapter you should be able to:-

1. Distinguish between goods and services.
2. Show the use of the 7Ps in an organization marketing a service.
3. Show in detail why and how an organization’s marketing strategy is supported by
the use of physical environment (evidence), participation and process.

Introduction

Phillip Kotler defines a service as any activity or benefit that one party can offer to
another that is essentially intangible and does not result in the ownership of anything.
Examples of services are banking, insurance, health, education, retailing etc. Services
differ from goods, and as a result certain aspects of the marketing approach will differ.

Characteristics of Services

a) Intangibility
Before actual purchase of a service is made, one cannot see, taste, feel, touch or
see a service because a service in intangible. Products can be tasted, touched, or
seen before one makes a purchase. In selling services marketers should therefore
provide selling clues (physical evidence) as to the nature of the services such that
the customer visualizes the appropriateness of the service to satisfy their needs.

b) Inseparability
Services are produced, made available, sold and consumed at the same time whilst
products are produced, sold and consumed separately. In simple terms the
delivery of the service is completely inseparable from the person providing it. The
implication is that the customer – contact employees (participants) are trained and
motivated so as to deliver a quality service.

c) Heterogeneity
In providing services it is difficult to maintain a high degree of consistency
regarding perceptions that customers may have in the purchase of service. The
implication is that to achieve consistency marketers should establish and maintain
a culture that emphasis on the consistency of quality control and customer service
(process) in the delivery of the service. Customer complaints should also be
monitored on continuing basis.

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d) Ownership
When a customer purchases a product they can own it, but when they purchases a
service they cannot own it. The implication is that the marketers of services
should highlight, stress and promote the benefits and advantages of non-
ownership. For example in non-ownership there is assurance of quality and
variety than in ownership.

e) Perishability
Services are perishable and cannot be stored. Empty seats in a class, empty seats
in a bus, empty hotel rooms are examples of lost services. In other words services
lost cannot be stored to be used sometime because they are perishable. This
characteristic of perishable result in fluctuations in demand for services because
services not used during quiet periods cannot be used during peak or busy period.

THE 3Ps

Because of the nature of services the marketing mix for services include Participants,
Process and Physical Evidence as additional elements to the 4Ps namely Product, Price,
Place and Promotion. The service marketing mix can therefore be regarded as the 7Ps.

a) Participants
The staff in an organization that provides services are uniquely important in the
service marketing process because the service is inseparable from the person or
personality of the person providing it. For example in a bank. College, hospital,
airline etc, the staff involved are producing a service, providing and selling the
service, liaison with the customers to promote the service and to respond to
customer needs. The higher level of customer contact involved in the delivery of
the service, the more the crucial is the role of staff in generating customer service
and adding value, hence marketers should place much emphasis on participants by
employing the right people, training, motivating and rewarding them for quality
performance because the service is inseparable from the person providing it. It is
therefore important for an organization to ensure that all its staff are involved in
customer service and are customer-oriented because customers can form
impressions and perceptions of the organization and its offering on the basis of the
attitude and behaviour of its staff who provide the service.

b) Process
The manner in which the service is provided is referred to as the process. With a
product a consumer is not concerned about the process that resulted in the
production of the product, whilst with a service a consumer is particularly
concerned and is deeply affected by the process involved in the delivery and the
effectiveness of the process by which services are made available to them. For
example people seeking treatment at a hospital are affected by the manner they
are served and how long it takes to get treated. Marketers of services can achieve
a competitive edge by simplifying and improving on the process of delivery of the
services. Prompt and courteous attention to customers, a clear system of dealing

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 with customer queries, enquiries, complaints and handling of orders are important
aspects in the delivery of a service, help lines and information desks should be
established to assist customers in difficulties.

c) Physical Evidence (Environment)

The context in which the service is made available is referred to as the physical
evidence, physical environment or service environment. This includes the
location, building, equipment, atmosphere, furnishings, literature and brochures,
vehicles, staff uniforms etc. The physical evidence is important because it
compliments and assist effective marketing of services.

Such physical evidence transmit messages and information, conveys the nature of
service involved, implies professionalism, confidence, purpose, reassurance, and
reinforce an existing image. For example in a bank, the building, furnishings,
reception area, equipment, brochures should speak volumes about the quality of
service offered. The bottom line is that marketers should always seek to upgrade
and improve the Physical Evidence.

Summary

Marketers of services should pay attention to the three additional P’s namely physical
environment, process and participant as they compliment and assist in the marketing
strategy of an organization.

Examination Questions

1(a) Why must marketers simplify transaction process (10 marks).

(b) Explain how a high clothing chain can support its marketing strategies by
modifying its physical environment (10 marks).
2. How should marketers adapt the 7Ps for an organization developing an Internet
based marketing Strategy? (20 marks)

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 CHAPTER FIFTEEN
INTERNAL MARKETING

Learning Objectives
After completing this chapter you should be able to:-

1. Define Internal Marketing and explain the role it plays in an organisation.

2. Show how Marketing principles can be turned inwards for the benefit of the
organisation.

Introduction

The success of any organization is dependant upon the full participation of everybody in
the organization. Total company effort is therefore a prerequisite for effective
implementation of Marketing Programmes. Bearing this in mind it is therefore important
to market the vision, mission, goals and strategies to the first group of “customers” who
are staff members whose acceptance and approval of the Marketing Programmes is
critical to the profitable implementation of such marketing programmes. Marketers
should therefore understand Internal Marketing and the role it plays.

Definition
Internal Marketing is defined as the process of turning the disciplines, concepts and
approaches of marketing inwards (organization) to improve the effective implementation
of business plans and to change programmes. Internal Marketing entails informing
persuading convincing and winning the support of staff members.

The Internal Marketing Programme

Plans of any organization will not bring any results unless those who are involved in
implementing them are committed to the plans. Changes in programmes and plans can
only be successful if such changes are approved by all staff members whose participation
is critical to the success of any such changes. With internal marketing the plan is the
“Product” and the staff members are the “customers” hence there is need to effectively
market the plan, so at to achieve “customer” staff satisfaction.

The marketing disciplines and approaches that are turned inwards include:-

a) Research
This is where the organization makes effort to identify the specific needs and wants of
the employees. Employees come from different educational backgrounds. It is
through research that management knows about needs and expectations of the
employees.

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b) Customer/Consumer Behaviour
As stated earlier, that employees are a group of customers, it is important to
understand what their behaviour is in terms of what they want, how they want it,
where they want it. Such an insight becomes the basis of the plans and strategies
that are used to enlist the support and co-operation of the staff members.

c) Segmentation
It is important to subdivide the workforce into segments e.g. middle management
and lower management, professional and non-professional staff, skilled and non-
skilled. Segmentation of the workforce will enable the organization to address the
specific needs of each segment.

CONCLUSION

Conclusively the use of Internal Marketing can therefore be described as a sure way of
achieving effective implementation of plans as it ensures support and eliminate any
resistance from employees.

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 CHAPTER SEVENTEEN
INDUSTRIAL MARKETING

Learning Objectives
After completing this chapter you should be able to:
1. Know the differences between Industrial buyers and consumer buyers.
2. Describe factors that influence industrial buying and explain why Industrial
marketers should identify and understand these factors.
3. Explain use and application of the promotional mix in Industrial marketing as
compared to consumer Marketing.

Industrial Marketing

This refers to the marketing of Industrial Products and services for production of other
products and services that are sold and supplied to others.

Characteristics Of Industrial Markets

1. Fewer Buyers
There are few buyers in industrial markets than in consumer markets. For example
buyers of steel products are fewer than buyers of consumer products, such as
sugar.

2. Large Buyers
Most of purchasing in industrial buying is accounted by few large buyers. They
are large buyers because of the amount of business they bring.

3. Close Supplier – Customer Relationship

Because of the power and importance of large customers and smaller customer
base in industrial marketing, close relationship exist between customers and
sellers. Industrial buyers, who are few by nature, are more manageable than
numerous consumer buyers.

4. Geographical Concentrated Buyers

Industrial buyers are normally concentrated in certain areas, while consumer
buyers are almost everywhere. Factories are situated in specific areas. In
Zimbabwe we have light industrial and Heavy Industrial areas. Such a
Geographical concentration helps in reducing the cost of selling to the industrial
buyers.

5. Demand
Industrial demand is derived demand. The demand for industrial goods and
services is derived from the demand for consumer products, for instance an
increase in the consumer demand for cars result in increased demands for steel.

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 Demand for steel is therefore derived from the demand for cars. Demand for hides
is therefore derived from demand for shoes.

6. Nature Of Buying Unit

Industrial purchasing involve more buyers and professionalism unlike consumer
purchasing where individuals buy without any procedures involved. Trained and
professional personnel make up the buying committee in industrial buying.

7. Types Of Decision And The Decision –Process

Industrial buyer faces more complex buying decisions than consumer buyers.
This is so because large sums of money, complex technical and economic
consideration are involved in industrial buying than in consumer buying. In
addition there are more consultations in industrial buying than in consumer
buying and this creates challenges for the industrial sales person.

Buying Decisions Industrial Buyers Make

The industrial buyer faces decisions in making a purchase and decisions made
depend on the type of buying situation. Three buying situations exist for the
industrial buyer and these are.

i) Straight Re-Buy
This regards a routine repurchase that may have been made many times before.
The buyer re-orders without any modifications of changes. No new information or
new sources of supply are looked for. In simple terms straight rebuy refer to
buying something that has been purchased before and this is normally by buyer
alone.

ii) Modified Re-buy

In this case, a review of buying situation is done. The buyer seeks to modify
product specification, prices, delivery requirements terms or suppliers. Such
modification or changes are important to suit the present circumstances of buying
organisation. The decision to purchase may take longer than in straight rebuy.

iii) New Task

This occurs when a firm has new needs and is buying a product or service for the
first time and require a great deal of information to make the best buying
decisions. The greater the cost or risk the larger the number of decision
participants, the greater their efforts to collect information and the longer it takes
to complete the decision. The new-task situation is the marketer’s challenge and
opportunity, as he/she should reach the major influences in the industrial decision
making unit (DMU).

Major Influences On Industrial Buyers

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Industrial buyers are subjected to many influences when they make buying decisions.
Industrial marketers should understand the major influences so as to develop effective
marketing programmes. The major influences are:

a) Environment factors
b) Organisational Factors
c) Inter-personal factors
d) Individual factors

a) Environmental Factors
The economic, and technological factors also influence industrial buyers hence
there is need to understand them. The industrial marketer should continuously
monitor the environmental forces and determine how they affect buyers and try to
turn problems into opportunities.

b) Organisation Factors
Organisational objectives, policies, procedures and organisational structure also
influence industrial buying as buying should be in line with such organisational
factors. These impose constraints and limitations on the buyers and marketers
should know much about these.

c) Interpersonal Factors
As the buying centre consists of many participants with different statuses,
authority, persuasiveness etc. Each one is affected and affects others. Marketers
should understand this and develop strategies that take them into account.
Ignoring this would cause problems to the industrial marketer.

d) Individual Factors
Each participant in the buying decision process has personal motivation,
perceptions and preferences. These are influenced by the individual’s age, income
education, professional, identification, personality etc.

Participants In The Industrials Buying Process

Industrial buying is done by the Decision-Making Unit (DMU) the Buying
Centre. A buying centre includes all individuals and groups who participate in the
purchasing decision – making process.

The Decision Making Unit (D.M.U)

The D.M.U consist of several members who play different roles as follows.

a) Users – those members of the organization who use the purchased products,
goods, and services e.g. the machine operator. Their input is important in the
buying of a product.

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b) Buyers – those members of the organization who are assigned to do the actual
purchasing of goods and services. The buyer does not make decisions but simply
purchase as per instructions and directives.

c) Influencers – those members of the organization who influence in decision

making process directly or indirectly by providing information and criteria for
evaluating alternative buying actions and situations.

e) Deciders – those members of the organisation with authority to make decisions

among alternative buying actions. Deciders make decisions on what, where and
how to buy for example senior managers.

f) Gate keepers – those members of the organization who supply and control the
flow of information and material in the buying centre. They play an important role
and have the power to prevent sellers or information from reaching members of
the buying centre. Examples of gatekeepers are purchasing agents, receptionists,
and the security guards. It is therefore difficult for the industrial marketer to have
access to the buyer without the consent of gatekeepers.

The Industrial Decision – Making Process

The industrial – decision making or buying process consist of eight stages as
follows:-

1. Problem Recognition
The buying process starts by somebody in the organization recognizing a problem
or need that can be met by purchasing a good or service. The industrial marketer
plays an important role in assisting the prospective buying organization to
recognize a need or a problem.
2. General need recognition
At this stage the buying organisation describes the characteristics and quantity of
the needed item. The buyer of the buying organisation may not b aware of what
they actually require and an alert Industrial Marketer should help the company to
define its needs and requirements.
3. Product Specification
At this stage the buying organisation specifies the product features and
characteristics they require. Written specifications will guide the buying team.
The industrial marketer plays an important role as he/she can recommend certain
product characteristics and specifications.
4. Supplier Search
At this stage the most appropriate suppliers are looked for. The buyer can
examine trade directories or phone other companies for recommendations. If the
Industrial Marketer has been involved from the first stage then he/she can be
enlisted as a possible supplier.
5. Proposal Solicitation
At this stage the buyer invites qualified suppliers to submit proposals. Marketers
should know how to write and present good proposals. Marketers should not just

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 present technical documents but Marketing documents should be submitted as
well. Such proposals should be good enough to stand above competitor’s
proposal. A good proposal can only be produced if the industrial marketer
understands the buyer situation and circumstances hence it is important for the
Industrial Marketer to be involved at all stages.
6. Supplier selection
At this stage proposals are reviewed and supplier selected. The selected supplier is
one who is technically competent and able to deliver on-time and to provide the
necessary services as presented in the proposal.
7. Order Routine Specification
The buyer prepares an order for the chosen suppliers and list the technical
specifications, quantity needed, expected time of delivery, warrants etc.
8. Performance Review
At this stage the buyer reviews supplier performance. Normally users are
contacted to evaluate and rate their satisfaction. Performance review leads the
buyer to continue, modify or drop the supplier. The Industrial Marketer should
make a follow up to identify any problems the buyer may be facing with the
product and to ensure customer satisfaction.
Promotion Mix In Industrial Marketing
The use and purpose of promotional elements in industrial marketing differ from
consumer marketing. In Industrial marketing the promotional mix is used as
follows:-
(i) Personal Selling
Personal selling plays a major role in industrial marketing than in consumer
marketing as there is need for more demonstrations and explanations. The sales
force for industrial products is likely to be smaller, because the goods and services
are usually more costly and sales are concentrated on fewer buyers than is the
case with consumer products. The sales force should be properly trained in the
area of product knowledge so as to adequately present, demonstrate and educate
the buyers on different aspects of the product.
ii) Trade Exhibitions
These are used as they provide an opportunity to the Industrial Marketer to
demonstrate product and to talk to prospective customers and also to show new
products. The industrial marketer is able to physically present products and
services, which can be seen, examined and often tested by prospective buyers.
There is personal touch with demonstrators and representatives available to talk
to. New products can be compared on the spot between rival products by potential
buyers.

iii) Public Relations

The need to inform and educate fairly small groups of customers or individuals
calls for Public Relations techniques e.g. feature articles, seminars, conferences
documentary video etc. This is so because:- Industrial buyers require information
and not just promotion and are fewer and can be approached more directly and
personally. More importantly technical products and services need detailed
explanation

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iv) Direct Mail
More of direct mail is used as it provides the opportunity to send detailed
technical information, price lists and catalogues to selected prospects. This is cost
– effective, as the buyers are few
v) Advertising
Advertising creates awareness of any given product and builds up the company’s
image. Representatives from well-known companies have a competitive edge over
those from unknown companies. Advertising does not play as much as big role in
industrial marketing as it does in consumer marketing where it plays a very
important role.

SUMMARY

Although Promotion plays an important role in industrial marketing the use and
application of the promotional mix element may differ with consumer products. Public
relations, Direct Mail, Personal Selling and Trade Exhibitions assumes more importance
in industrial buyers. Buyers are also different hence there is a need to segment.
Segmentation will enable efficient use of resources and better satisfaction of buyer needs.
Segmentation will enable efficient use of resources and better satisfaction of buyer needs.
Segmentation variables such as Demographic, operating, operating variables, Purchasing
approaches, personal characteristics, benefits sought and usage rates can be used in
segmenting industrial markets.
EXAMINATION QUESTIONS

1. You have been asked to give a 30 minute talk to final year, business management
students. They particularly want to know the difference between selling in the fast
moving consumer goods (FMCG) markets and selling in the industrial markets.

(a) Describe the characteristics of each market. (10 marks)

(b) Clearly set out the differences between the selling role in each
(10 marks)

2(a) Explain how Industrial and Consumer purchasing behaviour

differs (5 marks)
(b) Describe a typical Industrial Decision-Making Unit (5 marks)
(c) Show how the promotional mix is used in Industrial Marketing (10 marks)

3 You are the Marketing Manager for a company that supplies agricultural
machinery. Write a report to your Managing Director.

(a) Outlining the decision making unit (D.M.U) (12 marks)

(b) Why a knowledge of this unit is so important in the marketing Process.

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 CHAPTER EIGHTEEN
GLOBAL COMMUNICATIONS

Learning Objectives

After completing this chapter you should be able to:-

1. Define Information Technology and explain the benefits it provides to marketers.

2. Explain how the Internet, email, fax machine, computers and other information
technology devices can be used by marketers.

Introduction

The use of Technology has brought several changes to the way organizations do business
as computers and information technology has been incorporated in marketing and
marketing decision – making. Many organizations have therefore embraced information
technology to their advantage, hence it is important for business people to understand
what information technology is all about and how their organisations can benefit from it.
Some of the information technology developments marketers have taken advantage are:

i) Fax Machine
Written data or information is transferred electronically. Such quicker and faster
transfer will enable effective quick and timely decision-making.

ii) Internet
This refers to a collection of thousand of individual networks and organizations.
The Internet is used by organizations to market their products and services and
provides the opportunity for organizations to have direct business contact with
customers at home. Some of the opportunities and benefits brought about by the
Internet include expanding a customer base, effective and efficient customer
service as middlemen are cut out and fast dissemination of information through
advertising. With the Internet it has become possible for one in Zimbabwe to
make a purchase from a supplier in Japan, America or any other country.

iii) E-mail
The Email (electronic mail) utilize the Internet to communicate with anyone so
long they have e-mail addresses. The e-mail has made it possible for clients and
customers the world over, to make enquiries and purchase through the e-mail.
Such enquiries and purchases can be done in a fast and efficient manner.

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iv) Computers
Computers have been used to develop marketing strategies, making marketing
decisions and making use of facilities such as information reporting system and
design support systems (DSS). Computers provide quick and efficient processing
of data: more importantly information is stored in a cost-effective way. Online
shopping and related software have also been used and enables customers to make
purchases from distant places and allows the firm to automatically capture data
and process the sales records of customers and allows customers to buy using
credit cards. The PC has also been used in both e-mail and decision-making.

Summary

Information Technology refers to the electronic processing and transmission of

information. The Global Market and Global communication demands have seen the use
of the Internet, e-mail and other IT resources for communication. World wide web sites
are now operating as commercial information centres where customers and potential
customers can browse for information.

Information Technology has created many opportunities and marketers must take
advantage of their organizations to survive and achieve a competitive edge. Fast and
efficient communication is the major benefit of Information Technology hence marketers
should identify the opportunities created and capitalize on those opportunities.

EXAMINATION QUESTIONS

1. The evolution in computers and computer technology is having a major impact on

marketers and in the marketing function.

(c) Briefly explain 5 different uses for this computer technology in marketing (10
marks)

(d) Using the 5 uses already identified in (a) above, show how this technology is
being applied in the work place (10 marks).

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 CHAPTER NINETEEN
EXAMINATION TECHNIQUES

This Chapter takes a look at some of the examination techniques that if adhered to may
see the student scoring high marks. Students should therefore pay attention to the
following during examination.

i) Misunderstanding Questions

Failure to understand questions result in candidates providing wrong answers.

Candidates should take time to read, analyse and understand questions before
making an attempt to answer. Candidates should also select their best questions.

ii) Planning Answers

Candidate should plan an answer before they write it on the actual answer sheet.
A well planned answer will allow logical and sequential progression of points.
Writing answers without a plan leads to omission of important points and illogical
presentation of points.

iii) Time Management

Failure to manage time results in candidates failing to answer the questions as
required. The three hours should be allocated equally to the five questions because
the questions carry equal marks. Students have a tendency to spend more time on
the compulsory question forgetting that it carries the same marks as all other
questions. 20 minutes should be spend on reading all the questions and selection
of those to be attempted. Then 160 minutes from the three hours should now be
allocated equally to the five questions.

iv) Failure to Use Examples

Students have a tendency to concentrate too much on theory without giving
specific and practical home market examples. Such examples should also be
explained. Students should avoid statements such as “for example Vaseline
Winter Warmer Competition” without explaining what the sales promotion was
all about. It is important to explain such examples because the examiners in
London do not know anything about the “Vaseline Winter Warmer Competition”.

v) Labeling Diagrams
Diagrams, tables and charts, which are not properly labeled, will make candidates
lose marks. Candidates should not leave the examiners to assume. Diagrams
should also be used where necessary. For example one should not answer
questions relating to the product life cycle without use of a diagram.

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