MARKET AND MARKETING

A market describes any situation that brings buyers and sellers together for the
purpose of exchanging goods and services. It may be a physical location such as a
store or a mall but may also be in the form of a website which facilitates e-
commerce (buying and selling of goods over the internet).

Marketing is the process of identifying, anticipating and satisfying consumers’

needs and wants in a profitable manner. It involves all activities geared towards
satisfying a group of people needs in an efficient and profitable manner.

Target market-this is the group of consumers that the business is aiming to

satisfy. It can be an entire market or it can be a small segment of the entire
market (niche marketing).For e.g. a rental service may target a particular income
group with the vehicles it provides or a trailer may target its meals towards the
needs of school children.

MARKETING ACTIVITIES
These activities include:
1. Market research – This is done to find out consumer taste and behavior in
the market to know exactly what type of goods
and services consumers are demanding and at what
price they are willing to purchase these goods at. In
addition, market research is done to assess the level
of competition in the market so that the
business will be a position where they have an idea
what competitors are offering so they can be able to
match competitors or even provide better offerings
than competitors.
2. Pricing – involves setting a price that will encourage consumers to buy
while allowing the firm to make a profit. A price set too
high can discourage consumers from buying a product unless
they view the product as high quality and the price reflects
the quality. A price set too low may mean that the business
cannot recover all the costs involved in selling the product.

3. Packaging this is done to keep the product safe but at the same time
attractive to induce consumers to purchase the product.

4. Branding Involves attaching names, logos, trademarks or color scheme

that consumers are aware of

5. Sales promotion Involves short term incentives that are intended to boost
sales in the short run.

6. Advertising involves using the media to inform and persuade customers to

purchase the products.

7. Distribution involves getting the goods from the manufacturer to the

consumers.
MARKETING MIX
This involves the blend of marketing activities undertaken to market a good or
service. It involves the use of the 4 P’s of marketing including:
 Product
This refers to the type of goods and service produced e.g. quality, size,
design and packaging. This may even include elements that provide support
to the product after it is sold such as warranties and guarantees.

 Price
This involves the firm arriving at the price of the product. Pricing strategies
include:
1. Cost- plus pricing –the business adds a mark up to the cost of producing
the product. If the cost of making a t-shirt is $40.00 and the business
wants to add a 25% mark-up then the price the t-shirt will be sold for
will be calculated as $40.00 * 1.25=$50.00.This strategy helps to secure
a target profit on each item sold.
2. Penetration pricing- this is useful for new products to encourage
purchase by new and potential customers. The business sets a low price
to initially increase sales and market share and eventually increase the
price when market share has been captured.
3. Price skimming- this is especially used for new innovative or high quality
products. The business sets a high price initially to earn as much profits
as possible before competitors enter the market
4. Psychological pricing-some products are highly priced so they can gain
snob value for e.g. perfumes and artwork. It is aimed at getting
customers to think that “good things are not cheap” while “cheap things
are not good”. Psychological pricing also involves pricing in an unusual
manner such as $7.99 instead of $8.00.
  Promotion
This is the firm’s way of making customers aware that the product exist.
Therefore customers will be told about the product through advertising,
sales promotion, personal selling, public relations and other means of
promoting sales.

 Place
The firm is concerned with how the product will get to the consumer and
what channels of distribution will be used (wholesalers, retailers or directly
to customers).It refers to the locations or outlets that the product will be
sold.

FACTORS INFLUENCING CONSUMER BEHAVIOUR

Consumer behavior refers to the process of selecting and using goods and
services. Many factors influence the purchasing decisions made by individuals
including:
1. Price of the product- in general, the lower the price of the product, the
more of the product consumers are likely to
purchase. Higher prices tend to discourage consumers
from purchasing a product.

2. Price of substitutes –a substitute is an identical ,similar or related goods

which can be used in place of another one (for e.g. chicken and fish).If a
product is expensive and a cheaper substitute can be found ,it is likely that
people will switch from the higher-priced good to the less expensive
alternative.
3. Quality of goods – People are normally willing to pay more for what they
think are higher quality goods. Quality is normally in the form of durability,
features etc.

4. Taste – may refer to the flavor associated with the consumption of food
and beverages. However, in most cases it refers to the individual
preferences or style that may be influenced by culture, fashion and
personality. For example, teenagers choose their outfits according to their
preference in terms of color, design, material and length.

5. Tradition – tradition refers to customs and habits. Individual may choose

not to purchase items because it goes against their customs and habits. For
example, persons may not purchase carnival costumes and tickets because
it goes against their Christian beliefs. Additionally, the demand for some
goods increase during some religious seasons for e.g. Christmas, Diwali

6. Income – higher incomes allow individuals to purchase more often and in

larger quantities .Individuals with higher incomes are also able to afford
more expensive items. The opposite is true

7. Brand Loyalty – customers who have a good experience with a particular

brand may become brand loyal or faithful to that particular brand which
results in them repeatedly purchasing the product. The opposite is true
 Packaging
Factors affecting packaging and presentation of goods:
Packaging - the container or wrapping material around a consumer item that
serves to protect the product and make it attractive to customers.
E.g.. boxes, plastic, paper, cloth, tins. .

Factors affecting packaging:

a. Presentation
- Ease of distribution and disposal (Packaging should make the product easy to
pack and transport › it should be easy to handle and disposed of)
- Cost of the packaging (The packaging should be cost effective and not cause the
price paid for the good to increase too high)
- Physical characteristics of product (Is the good fragile? › Will the surface be
scratched easily? Does the product need to be protected from water?)
- The type of information to be displayed on the package

b. Use of brand names (Labelling)

1. A brand is an identifying symbol, color, name, image or trademark that

distinguishes a product from those of its competitors
2. (Brand awareness is the extent to which a brand is recognized by potential
customers and is correctly associated with a particular product.)
3. Brand loyalty refers to the faithfulness of consumers to a particular brand
as shown by their repeat purchases, despite the marketing pressures from
competing brands.
Methods of promoting sales
Promoting sales is different from sales promotion. Promoting sales involves
telling customers about your product. (Sales promotion is one of the methods of
promoting sales).
i. Advertising – Advertising is a long-term strategy involving the process of
expressing the qualities and advantages of your products and services,
relative to competitors. It typically covers communication methods that
are paid for like television advertisements, radio commercials, print
media, and internet advertisements.

Functions of advertising

- To introduce new products to the market

- To increase demand for a product in order to increase market share
- To inform/remind customers about a product to form a personal
bond/loyalty
- To underscore strong points of a product to maintain competitive
edge
- To bring attention to new trends, sales, promotional events,
discounts etc.
Types of advertising:
 Informative advertising - aims primarily at informing and educating
customers about a particular product.
 Persuasive advertising – aimed at persuading or convincing customers to
buy the product.
 Competitive – promotes one product over the competitor’s product
 Defensive – reacts to competitor’s advertising, deflect criticisms
 Reminder – a small part of an ad may be run to remind customers about
product during peak periods, low interest periods.
Forms of advertising
These include the various tools of advertising used to influence consumers
including:
 Radio and television
 Bill boards
 Newspapers, magazines, brochures, flyer, journals
 Motor vehicles

Loss leaders – heavily discounted products used to attract new

customers. It is a strategy used very successfully by large
retail firms .The aim of the strategy is not only to get
customers to purchase the loss leader items but
other products that are not discounted.

Social media – interactive web internet-based applications where

businesses are able to showcase their products and
service on popular social media platforms such as
Facebook, Instagram.

ii. Public relations-refers to the process and activities used by the business
to build a positive image in the minds of its customers. Some larger
organizations may have a public relations department to deal with these
activities.
Some tools used in public relations include:
 Sponsorship of activities in the community
 Press releases aimed at attracting the public’s attention to a particular
activity
 Scholarship for employees or their children
 Uniforms for staff members so that even before and after work, they
promote the business.
iii. Sales promotion (temporary strategies to increase sales). It is all about
the short-term sales of products and services. Many companies push
these promotions during specific periods when consumer demand is
likely to be higher than normal. Examples including trading stamps and
coupons, loyalty points, rebates, bundling, sampling

iv. Personal selling – is the face to face selling of the business’ product by
sales staff with the aim of gaining sales and building consumer
relationships. Presentations made by individuals representing the
business to prospective buyers in order to persuade them to purchase
the product. Good sales persons must be polite, enthusiastic,
persistent, good communication skills and possess knowledge about the
product. Telemarketing is fast becoming a critical part of personnel
selling where the telephone is used to directly offer the firms products
to consumers.
 Techniques of Selling
i. Personal Selling
Sales staff are always very keen to sell the company’s products since they often
receive a commission or a salary or a combination of both based on the level of
sales. This is mainly done through personal selling.
The process of personal selling involves:
1. Preparation by learning about the product and contact potential customers
if possible
2. Presenting the product to the customer and explain how it will suit the
customer’s needs.
3. Handling rejections is critical since not all customers will respond in a
positive way.
4. Closing the sale by presenting the final choices to the customer and they
may need to offer a discount to finally close the deal.

ii. Merchandising
This refers to the way in which goods are displayed. This may be done through
colorful, attractive shop displays, colorful brochures and leaflets and effective
webpages. These methods may be combined with special discounts to close a
sale.

iii. Adjusting of pricing policies

A price adjustment is the difference between the price paid for the product and
the sales price. In some countries, an item is purchased from a store and it goes
on sale a few days later and customers may demand that they be sold at the sale
price. Firms normally comply and allow these discounts to prevent customers
from returning the item and reducing the business’ profits.
 iv. Methods of Retailing
This includes:
 Shops :small in size, offer a variety of goods, offers credit ,longer business
hours

 Department stores: large in size, have several departments, many

employees.

 Mail order: products offered from catalogue, convenient to use, product

delivered to home or workplace

 E-commerce: product purchased from website, convenient for

customers, product is delivered, payment made through
credit card

 Telemarketing: product sold over the telephone, convenient to customers

 Vending machines: conveniently located, can be more expensive than

traditional shops, opens 24 hours 7 days a week.
 Terms of sale
The table below represents the advantages and disadvantages of the various
terms of sale option.
TYPE FEATURE ADVANTAGES DISADVANTAGES
Cash  Using cash for  No interest is  Risk of
payments charged money
 May receive being lost
cash or stolen
discounts
 Prompt
payment is
received for
items

Credit sale  Goods are  Goods  There is the

paid for in become the risk that
installments property of customers
 Credit is the buyer may not
normally for immediately pay for
six months to  Buyer enjoys items
a year the use of  Interest is
the product charged
while paying which is an
for them additional
cost to the
customer

Hire purchase  A deposit is  Goods  Interest

made become the charged are
 Goods are property of normally
paid for in the owner high
equal after the  Customers
installments final can often
over a given installment refuse to
period of time  Buyer enjoys repay
the use of
 the item
while paying
for them

Layaway  Deposit is  Customer is  Goods can

made. protected only be
 Item is only against price received
collected after increases. after full
the balance  Customers payment.
has been paid can pay at
off. their
convenience.

Consignment  Goods are  Convenient  Seller or

given to an for sellers consignor
authorized with a busy receives
third party to schedule to less money
sell delegate than selling
 Percentage of responsibility directly to
the sales goes  Any unsold consumers
to the seller goods can be
or owner of returned to
the goods the
consignor

Cash discount  Given for  Results in  Results in

customers to quicker lower profit
pay promptly payments margins
 Can be given and less due to the
as a way to debts owing lower price
boost sales to the charged
and getting rid business
of unwanted  Old stock can
stock be removed
Trade discount  Is a reduction  Businesses  Loss of
in the price of may be profit
an order no tempted to margin.
matter when purchase
the amount is larger
paid to quantities
encourage resulting in
large orders? more sales.

CONSUMER ORGANISATIONS
Consumer organizations are groups that seek to protect the interests of
consumers against abuses such as:
 Unsafe products
 False advertising
 Pollution
 Inaccurate labelling
 Inaccurate weights and measurements

Rights and protection of consumers

The rights of consumers include:
1. Right to consumer education (educated about their own rights)
2. Right to safety (protection against hazardous products)
3. Right to choice (not to be forced into a decision)
4. Right to be heard (right for a consumer’s complain to be heard)
5. Right to seek redress (satisfaction from a grievance)

Consumer organisations will take actions such as the following:

 Provide surveys so consumers can compare products
 Put pressure on government to bring in laws to protect consumers
 Seek to enforce consumer rights
 Threaten direct action ,such as boycott of a company and its products
The functions of a consumer organization therefore include the following:
 Provide a voice for consumers particularly where there are consumer issues
and complains
 Provide information to consumers about their rights
 Inform consumers about products so they can make comparisons and
informed choices
 Represent consumers by lobbying governments and producers
 Support consumers in establishing their rights
Government organisations and the consumer
The rights of consumers are recognized through the creation of consumer
protection agencies which may fall under the Ministry of Consumer Affairs whose
responsibility may include:
 Advising consumers on their rights and responsibilities
 Monitoring commercial activities to deter bad trading practices
 Receiving (through hotlines and websites) and investigating consumer
complaints
 Testing and rating consumer products.

Bureau of Standards
At an international level, standards for the production and delivery of goods and
services are established by the International Organization for Standardization
(ISO).The role of this organization is to establish international standards governing
the quality and method of production of most products. For example, guidelines
to building a safe car engine or creating safe air-conditioning systems, weights
and measurements etc. The role of the Bureau of Standards may vary from
country to country
The Ombudsman
The office of the Ombudsman provides an additional protection for consumers
and businesses, and specifically seeks to help individuals who feel they have been
unfairly treated by a government official. The Ombudsman is independent of the
government and has the powers to enter and inspect premises, to summon
witnesses and to compel them to give evidence under oath. The key
responsibilities of the Ombudsman are to:
 Deal with complaints from members of the public
 Carry out an independent and impartial examination of complaints
 Resolve these complaints
 Make recommendations (after consultation) about improvements in the
way that work is carried out by government officers
ROLE OF CUSTOMER SERVICE
Customer relationships are the interactions a business has with current and future
customers. Customer relationship management includes all the ways of managing
these relationships. A business can find out what consumers want and expect
using feedback on websites and social media as well as other direct feedback.
A key element of good customer relationships is customer service which can be
loosely defined as paying attention to customer needs by delivering a high quality
service. Customer service can also be defined as the conformity to customer
requirements.
A key element of customer service is communicating with customers through
services such as customer support that is designed to assist customers in making
the best use of a product.
Customer service is also a vital part of coordinating the flow of goods, service and
information to the customer. For example when a customer orders a product
online, they are given updates in terms of shipping and being able to track the
item.
Because customer service is so important, many businesses will carry out ongoing
research to find out how customers rate the experience through the use of a
follow up survey.

Forms of customer service

1. Warranty- A warranty is a written guarantee where the supplier sets out
that it will replace or repair an item if it proves to be
faulty within a given period of time .This gives more
confidence to the consumer, who is more likely to make a
purchase.

2. After-sales service – is all the care that a business provides customers after
the sale has been made. Examples include:
 Sending customers coupons for their next purchase
 Online tutorials showing how to use the product
 Contacting customers on the anniversary of the purchase to find out
if they are still happy with the product and if they want to update it.
 Providing a maintenance and/or repair service
 Providing a helpline to deal with any issues
 Contacting customers to identify other products that complement
the one already sold
The above techniques helps a business build a long term relationship with
customers and to instill confidence in the brand. They also help to boost
sales in the short and longer term.
3. Feedback – collecting feedback from customers is a good way of building
customer relationships and enables a company to
improve its service. This can be done though a telephone call,
a text or email or an online questionnaire.

4. Online Chat – this is where a customer is able to communicate with an

organization online by having a written conversation in
real time(for example online Japanese used cars
websites).This is a cost effective way of dealing with an
organization since it reduces the need to make phone calls

5. Toll-free numbers /call centers – large organisations have their own call
centers to deal with a range of
 customer – service issues. Customers are
given a menu of options from which to
choose, including making a payment,
questioning a bill, technical support
etc. Many of these calls are toll-free which
means that customers will not be
charged for contacting the
organization. Staff in call centers needs to
display good customer service behavior.

6. Suggestion boxes – A suggestion box is a way for customers to make

suggestions to a company by setting out their
ideas and putting them into a box.

7. Surveys- A customer survey is a structured list of questions delivered to a

representative sample of customers, to find out their views on
customer service and to identify their level of satisfaction with a
company and its products.

The Concept of Intellectual Property Rights

Intellectual property rights protect original ideas which are turned into products,
brands and works such as music recordings or books. The types of intellectual
property rights include:
 A trademark is something that distinguishes one company’s product from
those of its competitors. The symbol ® shows that a company has a
registered trademark.

 A copyright is protection provided for authors, composers and artists

(books, songs and movies etc.). The symbol for copyright is ©.

 A patent grants exclusive rights to the production, sale, use and even
importation of something, and can last up to 20 years. A company that
develops a new product, technique or process can seek these exclusive
rights (for example, pharmaceutical companies).

 A design right protects a design from being copied. A design relates to a

product’s visual appearance, covering aspects such as shape, color and
texture (for example the design of a garment, or the shape or structure of a
car).

Marketing Assignment: Creating a marketing mix for a new product(4 p’s)

1. Develop an innovative new product that you will like to introduce on the
market.
2. Describe the product in terms of the uses of the product, its special
features and your target market.
3. Explain why you choose this particular type of product
4. State who are some of your potential competitors
5. Describe the pricing strategy to be used for this particular product
6. Describe any sales promotion techniques to be used
7. Describe the type of advertising to be used and why
8. Describe how the product will be distributed to the consumers