MARKETING

Principles of Business
 MARKET & MARKETING
• A market is any space within which trade takes place between buyers and
sellers for a well defined product. This space can be a produce market, a shop,
internationally between countries or over the internet.

• Marketing is all those activities that facilitate trade. These include activities that
identify consumers’ needs such as market research and those activities that
satisfy consumers needs e.g., packaging and distribution. Marketing activities
therefore support the marketing of goods and services.
 MARKETING ACTIVITIES
Market research – the process of gathering information about potential customers.

Packaging – creating a suitable package for product usage and for advertising

Branding - differentiating the product of a company from other brands and

establishing loyal customers.

Pricing - identifying the right price that will encourage sales

Advertising – methods used such as the media to inform and encourage the purchase of

goods and services

Sales promotion – short-term methods used to encourage consumers to buy during a

specified period

Distribution - methods used to make the product available to consumers. For example

wholesale, retail or internet.

 MARKETING MIX

The marketing mix also referred to as the 4 Ps of marketing, categorizes all the
various strategies used in the marketing of goods and services. These categories are
product, promotion, pricing and place.
(1) Product this includes product designing, packaging, labelling and branding.
(2) Promotion advertising, public relations and sales promotions.
(3) Pricing includes various pricing strategies and methods.
(4) Place distribution of products.
 MARKETING RESEARCH

Market research is the gathering, recording and analysing of data to

address the marketing problems of a business. Market research must be

specific to the problem of a business. The marketing problem must

therefore be clearly identified so that the appropriate market research may

be conducted.
 TYPES OF MARKETING RESEARCH
Consumer Research – garners information on consumers’ feelings, thoughts and
reactions towards a company’s good or service.
Product Research – determines customer acceptance of the product.
Distribution Research – used to identify the most suitable channel of distribution for
particular products.
Advertising Research- Identifies the most suitable media to present the advertising
message.
 THE MARKETING RESEARCH PROCESS
This consists of five steps:
1. Identifying or defining the problem.
2. Developing information sources.
3. Collecting the information.
4. Analysing the data by using charts and graphs
5. Presenting the findings.
 REASONS FOR CONDUCTING MARKETING
RESEARCH
Market research provides managers with current, relevant, accurate and reliable

information concerning competitors, advertising, distribution and potential and

loyal customers. This information assists managers in making decisions about

packaging, product design, pricing, distribution and advertising.

 FACTORS THAT INFLUENCE CONSUMER
BEHAVIOUR
The following factors will cause consumers to either increase or decrease their demand
for a product.
-The price of a commodity
Consumers can afford to buy more of a good when its price falls and less when its
price rises.
-The prices of other goods and services (substitutes and complements)
Substitute products are those that can be used alternatively as they satisfy the same
need for a consumer. For example, a weekly shopper may decide to purchase fish
instead of chicken because the price fish has fallen significantly less than the price of
chicken. Therefore either fish or chicken will be adequate for dinner. If by the next
week the price of fish rises and becomes more expensive than chicken then the
consumer will opt for chicken.
-Complements are goods that are used together e.g. bread and butter. If the price of
butter rises then its demand will fall and so will the demand for bread. Conversely
if the price of butter falls, its demand will rise and so too will the demand for bread.
Income of consumers
As income level rises consumers will demand more goods and services-

Taste and Preferences

A change in consumers taste for goods and services will impact their demand.. For
example, changes in fashion will result in a drastic decline in demand for an out
going fashion and a rise in demand for what is trendy.

Expectations of a future Rise in Price

If consumers expect the price of a commodity to rise in the near future, they will
try to purchase more now, before the price increases.
-Brand Loyalty
Brand loyalty will ensure a continuous demand for a product regardless of
changes in its price or the prices of other goods and services.
-Spending Patterns
Consumer spending surveys compile information on consumer spending patterns
based on income levels. This informs businesses of what goods and services are in
demand.
-Changes in the size of the population
A population decline will cause demand to fall in a particular region. One reason
for a population decline in a region is migration.
Types Of Market Structures
The term market structure refers to the level of competition experienced by businesses in an industry. This factor
determines the nature of the product sold, how easy it for new businesses to enter that industry and the amount of
information available concerning that industry.
Monopoly
A monopoly exists when only one supplier has control over an entire market for a particular good or service.
Examples of monopoly in Caribbean countries are a single electricity and water supplier which may be owned by
the government or a private company.. The monopolist sells a product for which there are no close substitutes. The
monopolist controls the market because it is difficult for other firms to enter such industries. The challenges include
high start-up costs and difficulty in obtaining strategic raw materials or information regarding business operation.
The monopolist has great market power and can therefore set the price of products sold in the market.
Oligopoly
Oligopoly describes a market structure in which there are few large firms. They offer the same product for sale and
compete aggressively for market dominance. Examples of firms in this market structure are telecommunications and
petroleum companies. Entry into this industry is also difficult as start-up costs are very high, there is control of
strategic raw material and information is not easily available.
Perfect Competition
This market structure is characterized by many buyers and many
sellers of a product. The product is not unique as it is available from
many sellers. Firms in this market structure are price takers as they
cannot sell above the price of their competitors. Firms must accept
the market’s price as there are several competitors. There is perfect
knowledge about the business and there are no barriers of high
start-up cost and control of strategic raw materials.
Monopolistic Competition
Similar to perfect competition this market structure involves many
sellers. However, this market structure differs from perfect
competition in that each firm sells a branded product. Firms in this
market structure are a monopolist for their brand. There is freedom
of entry and exist into the industry as there are no barriers such as
strategic raw material, very high start –up cost and lack of
information.
How Price Is Determined
The price of a good tells us the value of that product in terms of money. A rational consumer will try to get the greatest value for mone
spent on goods and services. He will therefore weigh and compare the prices of commodities before making a decision to purchase.
Prices in a market economy are determined by the level of demand and the level of supply for each particular product.
The demand for a particular product is the amount that consumers are willing and able to buy at a given price. The law of demand
states that when prices are high demand will fall and when prices are low demand rises ceteris paribus (meaning all other things
remaining unchanged.).
The supply of a particular commodity is the amount that firms are willing and able to supply at a given price. When prices are high
supply will rise and when prices are low supply fall. Suppliers are willing to sell more at higher prices as profits will be high, and
unwilling to sell large quantities when prices fall because of low profit margins.
The equilibrium price in a particular market is the price at which consumers and suppliers are willing to trade a certain quantity of a
commodity. For example, consumers are willing to buy 55 litres of milk at $3 and suppliers are willing to supply 55 litres at that price.
the price increases to $4 there will be a fall in demand to 30 litres as some consumers are not willing to buy milk at this price.
The demand and supply curves are drawn from the demand and
supply schedules. Price is measured on the vertical axis and
quantity on the horizontal axis. The demand curve slopes
downwards from left to right and the supply curve slopes upwards
from left to right. The intersection of the two curves indicates the
equilibrium price and quantity
Copyright, Patent & Trademark
Copyright is a form of intellectual property right that legally protects
the creators and innovators of original works. Copyright protects
creators’ expressions such as music, painting, movie, photograph,
writings etc. Individuals who wish to use works that are copyrighted
must request permission from its creator. Copyright law allows
creators of original work to be paid for them. Other forms of
intellectual property rights are patents and trademark.
Patent protects innovation. It excludes others from making and
selling that invention for a number of years.
Trademark legally protects brand names. It gives the seller
exclusive rights to use a particular brand name.
Methods Of Promoting Sales
Promotion includes all forms of advertising, public relations and
sales promotion.
Advertising is the paid presentation of goods or services through the
media for the purpose of encouraging consumer patronage. The
media refers to television, radio, magazines, newspapers, billboards,
websites etc.
The Purpose of Advertising
-to attract attention
-to inform customers
-to increase sales
Sales Promotion
Sales promotion is a marketing strategy that is used to induce
customers to buy immediately.
Examples of sales promotion methods are:
a. A sale on items.
b. Bargain packs, e.g. ‘two for price of one’.
c. Coupons. These are printed in the daily newspaper or magazines.
The holders of coupons
are allowed a discount on the items bought.
d. Games, e.g. guessing riddles
e. Contest. Purchasers may receive a prize if they are the winners of
a contest.
f. Trading Stamps. These are given to purchases with each item
bought. Booklets filled with
these stamps may be returned by customers for goods, services or
money in exchange.
g. Loss–Leader. A loss-leader is a product that is in high demand
and is therefore used to attract consumers to a business location by
cutting its price very low. The business uses a loss leader to attract
large number of persons to its location so that other items will be
sold. The profits lost on this product will be made up on the high
sales turnover of the other products that will be bought along with
the loss-leader.
Public Relations
Public relations activities are aimed at creating a favourable
impression of a business in the eyes of the public. Public includes its
customers, its suppliers, the government and the surrounding
community. Public Relations activities include sponsorship of local
sporting events, press conferences, and donations to charity.
Techniques Of Selling
These are methods used to sell products more effectively by focusing on each customer’s personal needs. Selling techniques
include:
1. Personal Selling
2. After-sale services such as warranty and installation
3. Merchandising
4. Good Customer Relations
Personal Selling
This is the use of sales persons to present and sell goods and services of a firm. Sales persons promote a firm’s goods directly to a
specific consumer. They locate new customers, provide display services, demonstrate the use of products, deliver goods, collect
payments and provide the firm with feedback
After Sales Services
Customers are entitled to these services once they have made a purchase. They include delivery, installation and warranty. These
services are free and therefore usually encourage consumers to buy.
Merchandizing
Merchandizing refers to self service methods of sale. This is used in supermarkets and department stores. It allows for a better
display of goods and creates a more comfortable shopping environment.
Good Customer Relations
Building good relationships with customers ensures customer satisfaction, repeat customers and recommendation to new
customers. The sales staff must be trained in the principles of good customer relations. This entails, listening to customers being
helpful and polite.
Terms Of Sale
A business establishment may offer its customers various terms to settle accounts.
Cash
This is preferable by most businesses and therefore customers are encouraged to make cash
payments. They are usually offered a lower payment amount for goods bought for cash.
Credit
Customers are allowed to pay at intervals over a short- term, usually one to three months to settle
outstanding balances.
Hire Purchase
Hire-purchase is a long term payment plan e.g. 24 – 36 months. Interest is charged to the customer
increasing the amount owed.
Cash Discount
A cash discount is a reduction in the price of a good that is paid for immediately or over a short
period of time by a customer. For example, if a an appliance store offers 5% discount on items
bought for cash then 5% of the sale price would be deducted from the actual bill
Trade Discount
A trade discount is the reduction in the price of a good given by a manufacturer or a wholesaler to a
retailer to allow the retailer to make a profit or to encourage bulk buying. Thus if an appliance
manufacturer offers 10% trade discount to retailers then 10% of the catalogue price or the quoted
price would be deducted from the retailers’ actual bill.
Consumer Organizations
Consumerism is defined as the education and the protection of
consumers to prevent their exploitation.
Consumer exploitation includes:
-overcharging
-offering poor quality goods and services
-short measurements and weights
Consumerism is practised by various groups in the economy: the
government, private nstitutions, and private firms.
Consumerism practiced by the government
This is done through various government agencies. These include:
1. The Consumer Affairs Commission – This institution was set up to
disseminate information about consumer rights and responsibilities
as well as provide consumers with an avenue for redress if they are
exploited.
Consumer Rights
-The right to safety
-The right to be informed
-The right to choose
-The right to be heard
-The right to redress
-The right to consumer education
-The right to a healthy environment
Consumer Responsibility
-The responsibility to beware
-The responsibility to be aware
-The responsibility to think independently
-The responsibility to speak out
-The responsibility to complain
-The responsibility to be an ethical consumer
-The responsibility to respect the environment and avoid waste,
littering and contributing to pollution.
2. The Fair Trading Commission – This agency was set up to administer the fair trading act. It is
concerned with matters such as; Tied selling (marrying of goods), misleading advertising (untruths about
goods and services presented for sale), untrue sale (an announced sale for which the price of items
remain the same).and the use of market dominance to squeeze firms out of the industry (For example,
large firms may drop the price of their goods so low that small firms are unable to compete with them.)
3. The Bureau of standards -The bureau carries out regular checks on business enterprises to ensure
that goods and services offered for sale meet the standards stipulated by this institution.
4. The Ombudsman
The Ombudsman is a government official who protects the rights of citizens who may suffer any kind of
injustice from dealing with a government agency or a government official. For example, the Ombudsman
will investigate the death of a loved one due to the negligence of a public hospital.
Consumerism practiced by private Institution
-Local consumer groups
-Radio talk show hosts listens to consumers’ complaints
Consumerisms practiced by private firms
-Offering warranty/guarantees on items sold
-Labels carry information on ingredients, nutritional content and health risks that may be associated with
the product.
Links In The Distribution Chain
Manufacturers must find the most efficient ways of getting the goods
manufactured into the hands of consumers.
The channels/chains of Distribution
Channels of distribution refer to the means by which commodities
reach the hands of consumers from the plant of manufacturers. This
may be done directly from the manufacturer to the consumer or
indirectly through middlemen such as wholesalers and retailers.
Types of Channels
1. Direct Channel – Manufacturer – Consumer
Goods are bought directly from the producer e.g. purchasing
furniture from a manufacturer.
2. Indirect channels (a) Manufacturer – Retailer – Consumer
Goods are bought from a middle man e.g. a retailer. Retailers
display goods, sell in small convenient quantities and offer credit.
They therefore aid manufacturers in moving goods quickly.
3. Indirect channel (b) Manufacturer –Wholesaler – Retailer –
Consumer
The wholesaler is a second muddle man/link on the chain. The
wholesaler purchases in bulk from the manufacturer and stores them
in large warehouses. They therefore assists manufacturers by
moving large amounts of items from plant Retailers purchase goods
from wholesalers and sell them in smaller quantities to consumers.
Methods Of Retailing
There are several methods by which retailers can offer items for sale.
Community Shops and Convenient Stores
These locations tend to serve a particular community. Opening hours include all weekend days,
holidays and very late in the evenings. Costs for some commodities that are not government
controlled tend to be higher than other types of retail outlets. Community shops in particular cut
and shape products to suit customers and offer credit.
Department Stores
These stores carry a several lines of goods under one roof. A department store may feature a
clothing department, household items, stationery, hardware etc. It provides convenience to
customers who can pick up several items in one place, and allows the businessman the cost
effectiveness of operating several business entities in one location.
Mail Order
Companies that retail through mail order benefit from reduced operational cost of location and
staff. Since display areas are not required only an office and storage facility are necessary for the
operation of this business. Orders are made from catalogues and goods are delivered by courier
or mailed to customers. This saves time and effort of consumers to visit shopping locations.
E-commerce
Orders are made by customers over the internet from the websites
of businesses. Payments are also made over the internet. Packages
are delivered by mail or courier.
Tele- marketing
Tele –marketers introduce the company’s goods and try to obtain
orders via the telephone.
Vending Machines
These self-service machines are placed at various locations by their
owners. Customers are required to place the required funds inside
these machines and are then instructed on how to make their
choice. The machine then dispenses the product. This type of
business is very cost effective as owners may only pay a fee for
locating the vending machine.
Forms Of Transportation
Transportation is an integral part of the daily commercial and
industrial activities of a country. Transportation moves raw materials
from source to manufacturers and finished goods to consumers. It
also makes possible overseas trade and thus foreign exchange
earnings for an economy.
There are various modes/forms of transportation that can be used to
transport goods. Commodities may be transported by land, air, sea
and pipeline. The mode of transportation will depend on weight and
size of the commodities being transported, as well as the urgency for
delivery and the transportation costs.
Modes/Forms of Transportation
-Land
->Road
->Rail
-Air
-Sea
-Pipeline
Land-Road
Types of transportation include trucks, vans, cars etc. It is the most popular mode of transport as
all types of goods can be transported by road. Road transport is affected by bad roads, traffic
congestion and challenging terrain. Lengthy delays can affect perishable goods such as farm
produce being transported from rural areas to cities.
Land-Rail
This is a cheap form of transportation over long distances. Trains are suitable for heavy and
bulky things such as bauxite. Trains are a very slow mode of transportation.
Air
Types of transportation include cargo planes and helicopters. Because of the high cost involved
with air transportation it is suitable for important documents and expensive items e.g. jewellery.
Sea
Cargo ships and barges are some of the types of transportation used for transporting goods by
sea. Goods such as oil, bauxite and cars are transported by sea.
Pipeline
Pipelines are used to transport commodities such as water and gas. High costs are involved in
laying pipes initially. However overtime it becomes very economical.
Problems Of Distribution
Distribution locally is challenged by poor road conditions and difficult
terrain especially in the rural areas. Spoilage of perishable goods is
very costly and therefore types of transportation used must be
equipped to carry perishable goods.
Problems encountered in Overseas Transportation
The challenges faced in transporting goods internationally will
impact foreign exchange earnings. These challenges include:
-misdirection of goods – goods mistakenly sent to the wrong
destination
-flight delays
-strikes by airport and ship port workers.
-narcotics found in containers
-pilferage- goods stolen in transit.
Measures to mitigate problems of distribution
-careful checks before loading packages for shipment
-contingency plan when strikes occur
-public awareness on the consequences of narcotics found in
containers
-making persons responsible for any goods lost in their care