MARKETING

DEFINITIONS

Market – any situation that brings buyers and sellers together for the purpose of exchange

Consumer Market – market that brings consumers and suppliers of final goods and services together

Industrial Market – market that brings business customers and suppliers together.

Market Share – the proportion of total sales in a market accounted for by one brand or one business.

Marketing – all the processes involved in getting the right product to the right customer at the right price and at the
right place in a profitable and efficient way.

Marketing Mix- the five key decisions that must be taken in the effective marketing of a product.

Market Research – the collection and analysis of data about a market.

Quantitative research – research that leads to numerical results which can be presented and analyzed.

Qualitative research – research into the in-depth motivations behind consumer buying behavior or opinions.

Sample – the group of people taking part in a market research survey selected to be representative of
the target market overall.

Market structure – market classification according to characteristics of the firms in the market.

Perfect competition – markets with many buyers and sellers, homogeneous products, perfect
knowledge and easy to enter and leave.

Monopolistic competition – markets with many buyers and sellers, easy to enter and leave, but with
differentiated products.

Oligopoly – market dominated by just a few firms.

Monopoly – market dominated by one firm.

Demand – the quantity that consumers are prepared to buy at a given price during a certain period.

Supply – the quantity suppliers are willing to sell at a given price during a certain period.

Equilibrium price – the price at which quantity supplied equals quantity demanded.

Packaging – the outer wrapper or container for an item

Brand – an identifying symbol, color, name, image or trademark that distinguishes a product from those
of its competitors.

Brand awareness – extent to which a brand is recognized by potential customers and is correctly
associated with a particular product.
Brand loyalty – the faithfulness of consumers to a particular brand as shown by their repeat purchases,
despite the marketing pressure from competing brands.

Patent – the legal right given to a designer or inventor to be the only producer of a product. A patent is
applied form and is issued by the patent officer after it has checked that the new invention is truly
original.

Promotion – the ways a business tells customers about a product and encourages them to buy it

Advertising – paid-for communication with consumers to inform and persuade them to buy a particular
product.

Sales promotion – special offers or special deals directed at consumers or retailers to achieve short-term
sales increases and repeat purchases by consumers.

Personal or direct selling – face-to-face selling in which the seller attempts to persuade the buyer to
make a purchase.

Merchandizing – the way in which goods are displayed.

Consumerism – anything that is done to increase consumer awareness and protect the rights of
consumers.

Consumer organization – organization set up to increase consumer awareness and protect the rights of
consumers.

Wholesaler – a business that holds stock by buying from manufacturers in large quantities, breaking the
bulk and selling, in smaller quantities, to retailers.

Retailer – a business that buys from manufacturers or wholesalers and sells directly to consumers in
small quantities.

Consumer – the final purchaser and user of a product, the last link in the chain of distribution

Retailing – the process of selling in small quantities.

The key features of a market are that:

- there are buyers who want to purchase

- there are suppliers who want to sell

- there are goods and services for sale/purchase

- prices can be agreed between buyers and sellers so that transactions can take place.

Formula for market share – total sales of the business/ one product

Total sales in the whole market * 100

These are the main marketing activities:

Market research; pricing; packaging; branding; sales promotion; advertising; distribution.

Marketing Mix

The marketing mix for a product is a major factor in influencing whether a business can sell it profitably.
This is made up of four decisions (4Ps) – Product, price, promotion and place.

The Product:
The product has to have the right features – for example, it must look good and work well.
 The price must be right. Consumer will need to buy in large numbers to produce a healthy profit.
 The goods must be in the right place at the right time. Making sure that the goods arrive when
and where they are wanted is an important operation.
 The target group needs to be made aware of the existence and availability of the product
through promotion.

The right price is important too. If it is set too low, consumers may lose confidence in the product’s
quality; if it is too high, many will be unable to afford it.

Production must be effective – telling consumers about the products available and convincing them, if
possible, that ‘your brand’ is the one to choose.

Place refers to how the product is distributed to the consumer. If it is not available at the right time in
the right place then even the best product in the world will not be bought in the quantities expected.

Why is product important?

If the product does not meet customer expectations regarding quality, durability, performance and
appearance, then no matter how low the price or how expensive the adverts for it, it will not sell
successfully in the long term. New product development is crucial to the success of many businesses and
based on attempting to satisfy consumer needs identified through research. It is expensive and not
always successful.

Why is price important?

- if a price is set too high, many consumers in the target market will not be able to afford it

- if the price is set very low then many consumers will ask: ‘what is wrong with the product – is it very
low quality?’

- the profit made by the business on each item sold will depend on the price it is sold for.
Why is the place decision important?

This is concerned with how products are passing from manufacturer to the final consumer. The
distribution channel choice is important because:

- consumers may need access to a firm’s products to allow them to try them and see them before they
buy, to make purchasing easy and if necessary allowing for the return of goods.

- manufacturers need outlets for their products that give as wide a market coverage as possible but with
the desired image of the product appropriately promoted.

- retailers – firms that sell goods to the final consumer – will sell producer’s goods but will demand a
mark up to cover their costs and make a profit.

Why is promotion important?

Promotion includes advertising and methods of sales promotion such as special offers. Promotion can
have the following effects on consumers:

- informs them of new products to be able to make more informed buying decisions.

- informs them to changes to the product, its price and where it can be bought.

- helps to establish an image for the product.

- encourages existing customers to buy in larger quantities or buy more frequently which can help to
increase market share.

MARKET RESEARCH

The process of discovering what customers are buying and what they might buy in the future is called
market research. Information about customers and the markets helps to make sure that they marketing
mix of a business is right for the target market being aimed at.

REASONS FOR MARKET RESEARCH

- to reduce the risks of new product launches. By investigating potential demand from customers for a
new product/service the business should be able to assess the likely chances of a new product achieving
satisfactory sales.

- to predict future changes in consumer behavior that will affect demand.

- to explain patterns in sales of existing products and market trends. Unless gap managers are prepared
to find out why this happened, they would not be able to take any remedial action to stop the rot.

- to discover the most favored designs, flavors, styles, promotions and packages for a product.
Consumer tests of different versions of a product or of the proposed adverts to promote it will enable a
business to focus on the aspects of design and performance that consumer’s rate most highly.
MARKET RESEARCH STAGES:

- identify the problem to be solved or the information needed.

- set limits to the problem – focus on manageable targets that can be reached.

- use existing knowledge of the market first

- undertake primary research

- analyze data gathered

- draw inferences from the analysis of data

- put conclusions into effect.

SOURCES OF MARKET RESEARCH DATA

Sources of secondary data

- GOVEERNMENT PUBLICATIONS – this can be a good source of official secondary data such as Social
Indicators report and Family Expenditure Survey.

- LOCAL LIBRARIES AND LOCAL GOVERNMENT OFFICES.

- TRADE ORGANISATIONS. They produce regular reports on the state of the markets their members
operate in for eg. Furniture Retailers Association

- MARKET INTELLIGENCE REPORTS. These are incredibly detailed reports on individual markets and
industries produced by specialist market research agencies. They are very expensive but usually
available at local business libraries.

- NEWSPAPER REPORTS AND SPECIALIST PUBLICATIONS.

- INTERNAL COMPANY RECORDS. If the business has been trading for some time, a great quantity of
secondary data will already be available for further analysis such as customer sales record.

- THE INTERNET. Whenever research is conducted from the internet alone, the accuracy and relevance
of the source should always be checked carefully.

PRIMARY RESEARCH

Primary or field research can itself be divided into quantitative and qualitative research. Finding out
about the quantities that consumers might purchase is clearly important information but what is often
even more revealing is why consumers will or will not buy a particular product.

Advantages of primary research Advantages of secondary research

- up to date and therefore more useful than much - Relatively cheap – can be obtained from internet
secondary data .
- relevant – collected for a specific purpose – - quickly obtained from a range of sources
directly addresses the questions the business
wants answers to - often used before primary research as it can help
- confidential – no other business has access to to identify the main market areas of growth, which
these data may then need further primary research.
- should be more accurate than much secondary
data

CONSUMER SURVEYS

These involve directly asking consumers or potential consumers for their opinions and preferences. They
can be used in both qualitative and quantitative research. There are 3 important issues for market
researchers to be aware of when conducting consumer surveys:

- Who to ask?
- What to ask? The construction of an unbiased and unambiguous questionnaire is essential if the
survey is to obtain useful results.
- How to ask? (self-completed, return by post, filled in by interviewer or face-to-face)

SAMPLING METHODS

There are several ways of selecting an appropriate sample:

- RANDOM SAMPLING. Each member of the target population has an equal chance of being
included in the sample. To select random sampling the following are needed:
1. A list of all of the people in the target population
2. Sequential numbers given to each member of this population
3. A list of random numbers generated by computer.

- STRATIFIED SAMPLING. This method recognizes that the target population may be made up of
many different groups with many different opinions. These groups are called strata or layers of the
population.
- QUOTA SAMPLING. By this method interviewees are selected according to the different
proportions that certain consumer groups make up of the whole target population.
- CLUSTER SAMPLING. When a full population list is not available or the target population is too
geographically dispersed, then cluster sampling will take sample from just one or a few groups, not the
whole population. This can help to reduce cost but will not be fully representative of the whole
population.

THE FACTORS THAT INFLUENCE CONSUMER BEHAVIOUR.

- PRICE OF THE PRODUCT. When the price of a product increases, consumers will buy fewer of
them, if it decreases they will buy more of it.
- PRICE OF SUBSTITUTES. A substitute product is one that can be bought instead of another one
and perform the same function. When the price of a product’s substitute product increases then the
demand for the first product will rise. Similarly, when the price of a product’s substitute is reduced then
the demand for the other product falls too.
- QUALITY OF THE PRODUCT. If consumers believe that the quality of a product has changed,
particularly if there is no change in the price, then consumer demand will change.
- CONSUMER TASTE. Changes in consumer tastes or fashion can have a big impact on demand for
the products.
- TRADITION.
- INCOME. When consumer income rises, more expensive goods become more affordable. Luxury
goods increase demand when income rises. Demand for them falls when consumers’ incomes are cut.
Customers tend to buy more inferior goods when their incomes are falling.
- SPENDING PATTERNS. Many consumers establish a consistent pattern of spending. Patterns of
spending are the way in which consumers spend income on different types of goods which vary greatly
between different income groups, age and culture and ethnic groups.
- BRAND LOYALTY. If a consumer is brand loyal it means he or she will continue to buy a product
even if it is more expensive than competitor’s similar products.

TYPES OF MARKET STRUCTURE.

MARKET STRUCTURE MAIN CHARACTERISTICS

Perfect Competition - Very any buyers and sellers
- Products of the same quality
- Easier to enter and leave the industry
- Perfect knowledge about goods and prices
- Each business is a price taker- accept price taken determined by
market
Monopolistic - Many buyers and sellers
Competition - Differentiated products
- Easy to enter and leave the industry
- Good knowledge
Oligopoly - Only a few sellers in the market
- Products can be either differentiated or undifferentiated
- Usually very expensive and difficult for new firms to enter the
industry
- Consumers do not have perfect knowledge about prices and
products
Monopoly - Only one firm dominates the market
- Very difficult for new competitors to join
- Product is unique
- Products are usually protected by patents or heavy branding
- Prices can be set by the monopolists to achieve maximum profits.

Packaging and Presentation of products.

Characteristics of packaging:

- It should look bright, attractive and different from competitor’s products

- Be suitable for easy handling and transportation
- Carry the firm logo and brand name
- Provide important information to customers about contents, special features, instructions and
expiry dates/nutritional value.

Benefits of branding:

- It increases the chances of brand call by consumers

- Clearly differentiates the product from others
- Allow for the establishment for a family of closely related products with the same brand name.
- Increases consumer loyalty to brands

Patents may be licensed out to other manufacturers. A fee is paid for each product made using the
patent design.

Advertisements are usually directed towards the target market. Successful advertising campaigns have
led to substantial increases in consumer awareness and sales. Informative Advertising adverts that give
information to potential purchasers of a product rather than just trying to create a brand image.
Persuasive Advertising are trying to create a distinct image or brand identity for the product.

Advantages of advertising Disadvantages of advertising

- Makes consumers aware of the different
product choices available
- Encourages competition by keeping
consumers aware of the various product choices
- Increases sales by keeping the cost down
through economies of scale
- Promotes demand
- Encourages the production of goods of
high standards
- Aimed at persuading people to buy
products whether they need them or not
- Sometimes deceive the public by
exaggerated/untrue claims
- Resources that could be utilized in a better
way are sometimes wasted
- Some adverts are harmful because they
encourage antisocial habits and behaviour

Personal Selling include:

- PROSPECTING. This involves identifying prospective customers by selecting names from present
customers, wholesalers, retailers or by telephone.
- COMMUNICATING. The salesperson should be able to bring across what the firm requires to
prospective customers. He should be properly dressed and well informed about the product so as to
handle questions about and objections to the product.
- MERCHANDIZING AND SERVICING. The salesperson should be able to plan his/her sales strategy,
demonstrate how to use the product, deal with objections, make arrangements for payments,
discounts, installation of service and provide after sales service. Sales can be increased by: attractive
shop displays, colourful brochures and leaflets and effective webpages.

Methods of maintaining good customer relationship:

- Offering good customer service

- Providing an after sale service
- Maintaining contact with the customer and offering special promotion or price discounts.

Consumer is the final purchaser and user of a product. Organizations in the Caribbean that protect
consumers:

- Consumer Affairs Division of the Ministry of Legal Affairs that offer assistance and advice to all
citizens.
- Consumer Affairs Commission that protects the interest of all consumers
- Bureau of Standards Jamaica that promote higher standards in commodities, practices and
processes.
- Ombudsman- many governments appoint an independent person who is given the role of
investigating mal practices, mal administration and injustices.

Publicity or Public Relations

The public relations department whether inside or outside of large firms, usually handles the publicity of
the firm. In fact, this is what publicity is all about, giving a favourable image of the firm to government or
the public. This may take the form of press releases that provide information to newspapers, etc. in
order to draw the public’s attention.

- Sponsored activities such as sporting

- Flyers/booklets explaining different features of products.
- Scholarships to employees and their relatives that are reported in the news media
- Uniforms being provided for workers.

Factors influencing channels of distribution:

- Company factors – financial strength is a great determining factor as to the types of channels
selected.
- Market factors – if a material is large and scattered over a wide area, a producer may decide to
engage a sales force to sell directly to it.
- Product factors – the nature of the product determines to a large extent the channel used for its
distribution.

Types of middlemen

- Sales Agent or brokers – these do not own the goods they sell but they provide assistance to the
producer. There are many types of agents and brokers.
- Wholesalers – purchase goods in large quantities on their own account and this take on some
risks of the manufacturers. They may sell specific goods or a variety of goods and some of the risks
involved are: warehousing, packaging and promoting sales and marketing.
- Retailers – like wholesalers, own the goods they sell and therefore undertake all the risks
involved. They are classified based on the type of goods they sell.
Functions of the wholesaler:

- FINANCE. Producers do not have to wait until goods are sold to consumers before collecting
cash and increasing their cash flow.
- MARKETING. Promote the sale of goods for the producer.
- DELIVERY. Provide delivery service to retailers thus saving producers the expense of
transportation
- MAINTAIN STABILITY OF PRICES. By maintaining large stores of goods, wholesalers are able to
control price movements.
- PROVISION OF INFORMATION ON THE MARKET. Wholesalers provide useful information to both
producers and retailers to assist in the marketing of products.

Functions of the retailers.

- Places goods in convenient, saleable condition to customers.

- Provides a variety of goods
- Makes goods available in convenient quantities
- Makes goods available in convenient locations
- Provides pre-sales and after sales services for consumers
- May make credit available to consumers
- Provides advice to consumers
- Provides delivery service
- Provides market information to producers from consumers
- Provides goods at suitable times for consumers

Types of retailers- Street traders, independent retailers, voluntary chains, multiple shops, cooperatives
retail outlets, department stores, super markets and hypermarkets, specialty shops, mobile shops, mail
order houses an vending machines.

Disadvantages of using intermediaries such as retailers and wholesalers:

- Manufacturers may lose control of their market

- Producer’s profit margin may be reduced
- The commitment of the intermediaries to products may be reduced because they aslo sell
competing products.

Types of consumers

- Consumers of goods- tangible goods

- Consumers of services – intangibles
- Consumers of credit – those who buy and sell without paying or being paid immediately

The rationale of consumer protection:

The government has a responsibility to product its people against the unfair practices of businesses.
Some of these are:
- Giving misleading price reductions by stating unusually high original prices for their products.
- Making false claims about their products through various promotional strategies
- Using inferior or even dangerous raw materials in their production processes to keep costs
down
- Fixing prices through collusion so that they are artificially high
- Giving consumers incorrect weights or insufficient goods for their money
- Treating consumers unfairly when the make complaints or return faulty goods.

Consumer Protection

Consumers receive protection by:

- Through self protection. Where consumers make it their business to learn about their rights and
responsibilities and protect themselves by shopping wisely and making use of channels that are in place
for getting redress in the case of unfair treatment
- Through private organization such as consumer associations which educate and lobby for
legislation to be put in place to protect consumers
- Through government agencies such as standard bureau, ombudsman or fair trading,
commissions who by legislation have the responsibility to ensure that consumers are protected.

The rights of consumers:

- The right to redress, to consumer education, to safety, to be heard, to be informed, to choose,

to basic needs and to a healthy environment.

The responsibility of consumers:

- To be alert and aware of the safety of products before a purchase is made

- To think through ad make decisions independently about matters that will affect their choice of
goods and services
- To speak out and to inform producers and governments of their needs and expectations
- To be a far and ethical consumer and not to engage in dishonest practices, which in the long run
will cost all consumers money throughincreased prices
- To show respect for the environment and thus avoid littering, waste and contributing to
pollution.
- To make complaints and inform business and other consumers in a fair and honest manner
about their dissatisfaction and satisfaction with a good or service.

Discounts

A discount is a reduction in the price that producers or traders may allow their customer

Cash discounts

All persons can benefits from cash discounts when there is a sale and the prices of goods are reduced.
However, cash discounts are given to traders if they pay for goods within a specified period of time as
stated in their terms of sale agreement.
Trade discount

A trade discount is given to customers belonging to the trade, mainly retailers. This is given no matter
when the account is paid. Trade discounts are primarily given to boost sales and to increase profits.

Quantity discounts

A quantity discount is allowed when large orders are made. It is usually given in addition to a trade
discount. Again this is mainly to boost sales.

TERMS OF SALE

Type Features Advantages Disadvantages

Cash Using cash for  No interest Risk of money being last
payments charged or stolen
 May receive
cash discounts
Credit sale or credit  Goods are paid  Goods become Interest is payable thus
selling by installments the property of the increasing the cost
 Credit is usually buyer immediately
for 6 months to a year  Buyer enjoys
the use of goods while
paying for them
Hire purchase  Deposit made  Goods become Interest payment
 Goods are paid the property of the increase cost
by installments buyer after the final
 Balance spread payment
by equal installments at  Buyer enjoys
specified dates over a the use of goods while
fixed period paying for it
Layaway Deposit made Customers are Goods received only
protected against price after full payment.
fluctuations
Consignment This is an arrangement in which goods are left in the possession of another
party to sell.

Transportation

This is the means by which contact is made between two or more points by providing a service.

Factors to consider in selecting a method of transportation:

- The nature of goods. Different products have different features which will affect the type of
transport chosen. Perishable goods may need to be transported in refrigerated trucks.
- Speed. Perishable goods such as fruits may require fast means of transport. Air Is the quickest
means of transport but can be costly to the firm.
- Convenience. A factor to be considered Is how conveniently placed are the terminals
- Cost. Firms have to weigh the costs of one means of transport as against another; although
cheaper, a means of transport may not necessarily be the best.
- Size and weight. Size of the product and its weight are important factors to be considered in the
choice of transport.
- Reputation of the carrier. Some providers of transportation are known for the quick, efficient
and safe way in which they transport goods and people.

Methods of transport.

Road

Advantages
- It is the only type of transport that can
reach all destinations in a country
- Flexible, especially where door to door
deliveries are concerned
- Faster than other forms of transport for
distances below 200km.
Disadvantages
- Limit to the weight that can be carried
- Goods in transit can be held up by
congestion
- Pollution is a problem
- For distances over 200km, road transport
is slower and more expensive

Sea

Advantages Disadvantages
- Cheaper for goods - Sea transport is slower than other forms of
- Heavy, bulkier goods can be carried easily transport
- Specialized cargo, such as oil, can be
transported in specially designed shape

Pipelines

Advantages Disadvantages
- Convenient for transporting oil, water and - Broken lines can lead to leakage and waste
gas of resources
- Cheaper for consumer - Costly to build pipelines
- Inflexible – pipelines are not easily moved

Rail

The use of railway lines as a means of transport has declined in recent years. This is due mainly to the
increase in road networking and an increase in the number of vehicles.

Advantages Disadvantages
- Quicker than road transport for distances - Slower than road transport, over short
over 200km distances
- Bulky goods are cheaper to transport by - Less convenient than road transport due
rail to transfer of cargo and people from one train to
- Schedules are reliable another.
- Time may be inflexible
Air

Advantages
- Quickest form of transport
- Suitable for light and perishable goods
Disadvantages
- Cana be expensive for bulky goods
- Technical difficulties can interfere with
schedule
- Weight limit on cargo

Containers

These are large standardized metal boxes built to fit trailers, trains and ships of different sizes.

Advantages Disadvantages
- Easier to store in ships than to store - Can be expensive
contents - Not efficient if the container is not fully
- Handling costs are reduced utilized
- Sealing of containers reduces the danger
of theft
- Breakage is reduced due to less handling
- Ships spend less time in port and are able
to make more trips and thus earn more yearly
- Door to door transport is quicker and
cheaper

Transport problems and measures to reduce them

Common transport problems Measures to reduce them

Delayed shipment - Use a quicker form of transport
- Use a different carrier
Spoilage - Use a different transport company that
has a better reputation for handling goods
- Ensure goods are insured in transit
- Avoid transshipment as far as possible
- Use refrigerated transportation for food
products
- Use containerization
- Make clear on the packaging that contents
may be fragile
Misdirection of goods - Ensure all documents are clearly filled out
with sender’s and customer’s address
- All goods to be clearly labeled
Inadequate warehousing facilities - Use harbors or airports with extensive
warehousing
- Avoid holding large stocks

Poor security - Employ security company with special

vehicles
- Security cameras in warehouses and other
 sites
Industrial unrest - Do not rely too much on one distribution
company or one method of transportation
Ineffective communication - Ensure all drivers have cell phones
- Employ courier companies that use
electronic means of track
- Clear labeling of all packages
- Correct documentation

New Terms:

Social Media Marketing – this is the use of social media and websites to promote a product or service.

Integrated Marketing – this ensures that all forms of communication of marketing are carried out both
online and offline.

Methods of sales promotion:

1. Rebate – this is an amount paid by way of reduction, return or refund on what has already been paid.
2. Bundling – this is offering several products for sale as one combined product.
3. Loss leader – this is where a product is sold at a lower price to stimulate sales.
4. Social media

Forms of security for your product/ Intellectual Property rights:

1. Trademark – this is any sign capable of being represented graphically which is capable of
distinguishing goods and services of one trader from others.

2. Copyright – this is a legal right created that grants the creator of original work exclusive rights for its
use and distribution.

3. Industrial design – this is the appearance of all or part of a product that constitutes shape, colour,
texture or all of them.

Forms of customer service:

(a) Warranty - a written promise from a company to repair or replace a product that develops a
fault within a particular period of time.

(b) After sales service - is all the help and information that it provides to customers after they have
bought a particular product.

(c) Feedback - allowing customers to give transparent details about their experiences with a
product or service.

(d) Online chat - engages internet users and interests them in products or services.

(e) Toll free numbers/call centers – operated by a company to monitor incoming product support
information or inquiries from its consumers.
(f) Suggestion box - A suggestion box is a device for obtaining additional comments, questions,
and requests.

(g) Surveys - consumer research technique in which a questionnaire is used to gather information
from a sample of consumers.