BACKGROUND TO PRINCIPLES OF MARKETING

INTRODUCTION TO MARKETING

Every business, service or product oriented organization must

complete its operation by disposing of its products or rendering its

services to the customers.

Various marketing concepts hold that customers will generally not buy

a product they don’t know or they have not been asked/convinced to

buy. It is therefore the role of the marketing function in any business to

fill this gap and complete the business operation.

Definition of Marketing

The Chartered Institute of Marketing of the United Kingdom defines

marketing as, “The management process which identifies, anticipates,

and supplies customer needs efficiently and profitably.”

Kibera (1996) defines marketing as “the performance of business and

non-business activities which attempt to satisfy a target individual or

group needs and wants for mutual benefit or benefits.”

Kotler (2006), the American marketing guru provides the definition of

marketing as “A social and managerial process whereby individuals

and groups obtain what they need and want through creating and

exchanging products and value with others.”

Kotler and Armstrong (2008) define marketing as “The process by

which companies create value for customers and build strong customer

relationships in order to capture value from customers in return.”

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Core Marketing Concepts

1. Needs – The basic concept underlying marketing is that of

human needs. Needs comprise of those things that human

beings feel they cannot do without e.g. food, clothing, shelter,

safety, education etc.

2. Wants – Are forms of human needs that improve on their well

being but which they can do without. Wants are the form of

human needs taken as they are shaped by culture and individual

personality for example urbanites want Television sets.

3. Demand –Demand is the quantity of a commodity that

consumers are willing and able to buy at a given price over a

given time period other factors held constant. When a want is

backed by buying power it becomes demand.

4. Product – Is anything that can be offered to satisfy needs or

wants. It can be tangible or intangible.

5. Market – A constituency of potential customers sharing

particular needs or wants and who might be willing and able to

engage in exchange to satisfy that

need or want.

A market also refers to where buyers and sellers meet to

transact.

6. Marketing offer – Is a combination of products or service

presented to the market to satisfy a need or a want.

7. Value and Satisfaction – Value is the ability of a commodity to

satisfy human wants. It also refereed to as quality or utility.

Customers look for value in a product before paying for it. The

ability of a product to meet customer expectations results in

customer satisfaction.

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8. Exchange – Is the act of obtaining a desired object from

someone by offering something in return.

9. Transaction – An exchange of values between two or more

parties, where either party gains.

10. Marketing Management – Is the art and science of choosing

target markets and building relationships with them.

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What is marketed?

1. Goods2. Services3. Events4. Experiences5. Persons

6. Places7. Properties8. Organizations9. Information10. Ideas

MARKETING PHILOSOPHIES

A marketing philosophy according to Kotler (2006) is a marketing logic which an organisation uses to relate to its market.

Marketing has evolved overtime starting from days when firms concentrated in production to meet excess demand, to modern days when firms strive to meet customer expectation in the face of increased competition.

This historical evolution of marketing is discussed in five competing concepts as follows. The competing concepts are also referred to as marketing philosophies.

1. The Production Concept - It is the idea that consumers will buy products which are

highly available and affordable.- Therefore businesses managers should concentrate on

achieving high production efficiency, low costs, and mass distribution.

- They assume that consumers are primarily interested in product availability and low prices.

- Though one of the oldest marketing concepts it is still widely adopted by leading firms like e.g. Coca cola

2. The Product Concept- This concept holds that consumers will favour products

that offer the best quality, performance and features.- Therefore the organisation should devote its energy in

making continuous improvements to the product e.g. Auto mobile industry

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- However overemphasis on product development might also lead to marketing myopia. Marketing myopia refers to a mistake of paying more attention to specific product features a company offers than to the benefits and experiences produced.

3. The Selling Concept- The idea that consumers will not buy enough of the

organizations products unless the organisation undertakes large scale selling and promotional effort

- This concept is typically practiced by unsought goods providers e.g. Insurance services.

4. Marketing Concept

- The marketing management philosophy holds that

achieving organizational goals depends on knowing the

needs and wants of target markets and delivering the

desired satisfaction better than competitors do.

- Under this concept, customer satisfaction is the path to

sales and profits. Hence the slogan, “the customer is the

king as is adopted by some organisations.”

- Customer driven companies undertake massive marketing

research on customer needs and desires, gather new

product and service ideas and test product improvements.

The Selling and Marketing Concepts Contrasted

Starting Focus Means Ends

Point

The selling

Concept

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Factory Existing Selling ProfitsProducts and Through

Promoting sales volume

MarketCustomer Intergrated ProfitsNeeds marketing through

Customer satisfaction

Consumer(Wants satisfaction)

Company(Profits)

Society (Human welfare)

The marketing

Concept

5. Societal Marketing Concept

Holds that customers will favour products and services that

attempt to promote the values of the society, hence the

emergence of corporate social responsibility in the recent past as

a core marketing strategy e.g. Safaricom, Celtel, KCB.

It is a principle of enlightened marketing that holds that a

company should make good marketing decisions by considering

consumers wants, the company’s requirements, consumer’s long

run interests and society’s long run interests.

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Societal marketing concept

CUSTOMER RELATIONSHIP MARKETING (CRM)

CRM is defined as the overall process of building and maintaining

profitable ties between organizations and customers by delivering

superior customer values and satisfaction.

Overtime, relationship marketing has grown and replaced transactional

marketing as summarized in the table below.

Transactional marketing(One way communication)

Relationship marketing(Two way communication)

Focus on a single sale Product features oriented Short time scale Little customer service Limited customer

commitment Moderate customer contact Quality is the concern of

production

Focus on customer retention Orientation on product

benefits Long timescale High customer service High customer commitment High customer contact Quality is the concern of all

CRM therefore involves attracting, retaining and growing customers.

Basic Tenets of CRM

To effectively manage customer relationship, marketers normally

employ the following three approaches:

1. Customer Value and Satisfaction

Customer perceived value is the customer’s evaluation of the

difference between the benefits and costs of a marketing offer

relative to those of the competing offers. Whereas the customer

may not be accurate in judging the cost and values, they would

always want to maximize their benefits at minimum cost.

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Customer satisfaction refers to a products perceived

performance as compared to the buyers’ expectation. If the

products performance falls short of expectation the customer is

dissatisfied and vice versa. Smart companies aim at delighting

customers by exceeding their expectation.

2. Customer loyalty and retention

Satisfied customers produce several benefits to the company

including

(a) They are less price sensitive.

(b) They spread a favourably word of mouth to others about

the company

(c) They remain loyal for a longer time.

(d) They buy a wider range of products(e) They cost less to service as they are familiar with the

product and business design(f) They exhibit strong Lifetime Customer Value (LCV) as the

customer grows through the loyalty ladder from prospect, to customer, to client to a supporter, and finally to an advocate as shown below

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Hence for companies to retain their customers for a longer

period, they must aim high in satisfying their needs and wants.

3. Growing share of customers

Marketers are pre-occupied by the want to increase their share

of customers i.e. the share they get of the customers

purchasing in their product categories.

To increase share of customers,

(a) Firms can offer greater variety to current customers

(b) Train employees to cross sell - Cross selling means getting

more business from current customers of one product by

selling them additional offering e.g. offering a customer

who comes to buy a suit, a shirt, tie, a belt and shoes.

Brainstorming Session

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Zero defects. The following story is well known but it is worth

repeating. An IBM plant in Windsor, Ontario, is said to have

ordered a shipment of components from a Japanese firm,

specifying an acceptable quality level (AQL) of three defective

components per 10,000 shipped. In a covering letter

accompanying the shipment, the Japanese company apologized

and said it had met with great difficulty producing these

defective parts, and had been unable to understand why they

were required. They wrote: “We Japanese have hard time

understanding North American business practices, but the three

defective parts per 10,000 have been included and are wrapped

separately. Hope this pleases.”

Challenge

Do you think it was fair for the Japanese firm to have

supplied the defective parts? Why?

The Concept of De-marketing

Most companies’ in the hotel industry have trouble meeting demand

during peak usage times. In this and other excess demand situations a

need to carry out activities that may discourage the high demand is

necessary. This is called De-marketing.

De-marketing is marketing to reduce demand temporarily or

permanently. The aim is not to destroy demand but to reduce or shift

it.

MARKETING MANAGEMENT AND THE MARKETING MIX

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Marketing management aims at designing strategies that will build

profitable relationships with the target customers. To do so every

organization endeavors to adopt an effective marketing mix.

The marketing mix is a combination of controllable, tactical marketing tools that a firm blends to produce the response it wants in the target market. The marketing mixes consist of everything the firm can do to influence the demand for its product.

The many possibilities can be collected into four groups of variables also known as the “four Ps” of marketing mix i.e. product, price, place and promotion.The conventional 4 P’s of marketing have since been expanded to 7 P’s as :

Marketing Mix

Description

Product The goods and services on offer and their quality, feature, and design.

Price That which consumers are willing to pay to get a unit of the product or services

Place The distribution methodology of the products or service to the market place or target market

Promotion The selling activity used to motivate the customers and entice them to buy more of the product

People People are the human beings who drive product or service delivery

Process The framework that is followed in the marketing and delivery of products and services

Physical evidence

The tangible elements of services, ideas or any other intangible products put on offer

MARKETING CHALLENGES IN THE NEXT MILLENNIUM

There have been a number of concerns of marketing in this highly dynamic global world and these must constitute the bulk of challenges that a marketing student must also face.

1. Growth of Non profit Marketing

Schools, Hospitals, churches, the Army, the police and Museums are now practicing marketing, an activity that was the preserve of highly competitive profit making enterprises.

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Challenges in these fields include: Declining enrolment, Competition, Cost of service and Public relation

2. Rapid Globalisation

It is definite that today the world has become a global village. That which used to be exclusively for a particular market and culture is now a product of the entire universe with the improved transport and communication systems. When blending the Marketing Mix, we must now take into consideration the variable and diversified global preferences.

3. The Challenging World Economy

A larger part of the world is becoming poorer and making the global economy growth sluggish. This is a big challenge on pricing and quality. Wal-Mart for instance echoes that they sell for less. Why? Because they are aware of the challenge.

4. The Call for More Ethics and Social Responsibility

People don’t just buy successful products but ethically produced and sold products. The society would want to know how they benefit from a product they buy.

5. The New Marketing Landscape

The new marketing landscape loudly screams, “The Customer is everything”. The past theoretical and highly academic texts of marketing are being challenged with the new teaching and gospel represented by a number of publications whose titles tell clearly of the new marketing landscape, for instance: The Customer Driven Company, The customer is always right, Keep the Customer, Customer for Life Total customer service: The Ultimate weapon.

6. The New Digital Age

The explosive growth in computers, telecommunication, information, transportation and other technologies has had a major impact on the ways companies bring value to their customers

Advancement in technology has seen the marketer adopt new approaches such as videoconferencing, internet marketing, customer

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database management, interactive Television, cell phones, websites etc.

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MARKETING ENVIRONMENT

A company’s marketing environment consists of factors and forces that

may affect marketing management’s ability to built and maintain

successful relationship with customers.

The marketing environment offers both opportunities and threats.

Successful companies are those that adapt to the environmental

changes quickly and turn the threats to opportunities of growth.

Marketers understand their environments by conducting environmental

scanning. Environmental scanning is the practice of keeping track of

external changes that can affect markets including the demand for

goods and services of an organization.

The marketing environment has two broad dimensions:

(a) Micro environment

(b) Macro environment

THE MICRO MARKETING ENVIRONMENT

These are factors very close to the company that affects its abilities to

service its customers. The internal forces include; the company,

supplier, customer markets, publics and marketing intermediaries.

1. The Company

The marketing manager is influenced by the other company

departments; hence he/she must work closely with them.

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Top management for instance sets the company’s mission,

objectives, broad strategies and policies the marketing and

finance department’s sources for funds to carry out the

marketing plan. The R&D department focuses on designing

products that are attractive and satisfy customer needs.

Purchasing department worries about getting quality material

input, while production department produces the desired

product. All these departments interdependent on each other

and impact on the marketing departments plans and actions.

2. The Suppliers

- Suppliers provide the resources needed by the company to

produce its goods and services.

- Marketing managers must watch supply availability to

avoid deficiency of the product in the market.

- Marketers should monitor price trends of their key inputs

e.g. petroleum products, rubber, etc. rising supply costs

translates to increased production cost which forces selling

price to go up.

3. Customer Markets

A customer is one who buys a company’s final product in

exchange for a monetary value. Marketers must understand the

types of customer markets and where possible use price

discrimination on these markets. Five types of markets are

explained below:

(a) Consumer markets – Consist of individuals and firms that

buy goods and services for final consumption.

(b) Industrial markets – Buys goods and services for further

processing or for use in their production process.

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(c) Resellers markets – Buys goods and services to resell at a

profit.

(d) Government markets – Made up of government agencies

that buy goods and services to produce public goods or

services.

(e) International markets – Consist of buyers in other countries

including consumers, producers, resellers and

governments.

4. Publics

Publics are groups that have an actual or potential interest in an

organisation’s ability to achieve its marketing objectives. They

include:

(a) Financial Publics – They influence the ability of a firm to

obtain funds for conducting its marketing programs. They

include banks, investment houses and stockholders.

(b) Media publics – Include newspapers, magazines, radio and

television stations that carry news, features and editorial

opinion. The marketer must know how to interact with the

media for regular coverage of the organisation.

(c) Government publics – Marketers must always consult the

company lawyers on issues of product safety,

advertisement etc.

(d) Citizen action publics – A company’s public relations sector

must stay in term with consumers and consumer action

groups and attend to their concerns.

(e) Internal publics – Includes workers, management,

volunteers, board of director etc. Companies must

motivate their internal publics. It motivates marketing

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force strive hard to attaining the set goals and this spills

over to external publics.

5. Marketing Intermediaries

These are forces that can help the company promote, sell and

distribute its products to the final buyer. They include resellers,

physical distribution firms and marketing service agencies.

(a) Resellers – Are distribution channel firms that help the

company find customers e.g. wholesalers, distributors,

retailers (Nakumatt, Uchumi, Tuskys). These organizations

often have enough monopsony power to dictate terms or

even shut the manufacturer out of large markets.

(b) Physical distribution firms (transporters) – Are firms that

help the company move its goods from the point of

manufacturer to the final consumers. The marketer must

balance factors like costs, delivery time and safety.

(c) Marketing service agencies – Are research firms (Steadman

Group), advertising agencies, (Adopt A Light, Eagles

Outdoor, Monier Outdoor, The Scann Group), media houses

(Nation, Standard, Royal Media, KBC) and marketing

consultants. Such firm’s help the company promote and

target its products to the right markets. The marketer

must consider price, service quality, target market etc.

before choosing a marketing agency.

MACRO MARKETING ENVIRONMENT

Macro marketing environmental are factors that are outside the

company’s control and often pose threats or provide opportunities to

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the company. The external forces are often discussed under the

PLEST or PEST frame work as follows:

1. Political

2. Legal environment

3. Economic environment

4. Social environment (demographic environment)

5. Technological environment

1. Political and Legal factors

- These comprises of laws, regulations, government

agencies and social pressure groups that include and limit

various organizational marketing effort.

- Every marketing activity is subject to a wide range of laws

and regulations.

- These legislations have been enacted for the following

reasons:

(a) To protect companies from each other e.g. patent

rights.

(b) To protect consumers from unfair business practices

e.g. labels on cigarettes “… smoking kills …”, “don’t

drink and drive …”

(c) To protect consumers from overpricing e.g. laws

requiring banks to charge up to a given interest rate.

- Marketers need to know the major laws protecting

consumers, society and competition.

2. Economic Environment

- These are factors that affect consumer buying power and

spending pattern.

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- Marketers must understand economic trends. During

periods of boom (prosperity), production and employment

are high. Consumers demand more goods and services.

They spend freely on basic and luxury goods.

- During periods of inflation, prices rise faster than

production of goods. Consumer’s income is not sufficient

to sustain them hence low demand for goods/services

- During periods of recession, production and employment

decreases, this is followed by reduced consumption of

luxury goods as people stick to the basic needs only.

- During recovery, production starts to increase,

unemployment decreases and consumers start spending

more money in their purchases.

- Hence marketers engage in aggressive marketing

campaign, during periods of recession and decline and in

times of economic boom, some firms adopt the

Demarketing concept. Demarketing is an effort to reduce

demand for a product.

- An increase in government taxes automatically reduces

consumers’ disposable income. Marketers must

understand the implication of a VAT tax increase from 16%

to 18% for instance.

3. Demographic Environment

- Demography is the study of human population in terms of

size, density, location, age, gender, race, etc.

- The growing world population for instance has the

following implications to a marketer:

(a) A growing population means growing human needs

to satisfy.

(b) Depending on the population’s purchasing power, it

may mean growing marketing opportunities.

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- Marketers therefore have to keep close track of the

demographic trends because people make up markets

both at home and abroad.

- Marketers have to track changes in age, family structures,

geographic population shifts, population diversity etc.

4. Technological Environment

- Refers to forces that create new technologies, new

products and market opportunities e.g. internet, mobile

phones, computers, credit cards, television, etc.

- New technologies create new markets and opportunities.

Companies that do not keep up with technological change

soon find their products having been rendered obsolete.

- Through research and development, companies are able to

produce practical and affordable versions of products.

5. The Competitive Environment

- A firm’s competitors are those organizations who produce

and sell similar or identical products/service to those of the

firm.

- Successful firms are those that provide greater customer

value and satisfaction relative to competition.

- Marketers must gain strategic advantage by positioning

their product offerings strongly against competitor’s

offerings.

- Economists describe three main types of competition:

(i) Pure competition – Occurs when similar products are

offered, there are many buyers and sellers, the

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sellers can freely enter the market or exit it and both

buyers and sellers have free access to information.

Marketers must understand firms under perfect

competition take prices as given by the market and

that any marketing effort they engage only creates

awareness and might not affect the quantity

demanded directly e.g. the cooking oil industry in

Kenya is made up of Bidco, Unilever, Kapa, Pwani

etc.

(ii) Monopolistic competition – Occurs when there are a

few large sellers in the market. No free entry or exit

from the market, information does not flow freely

and each firm has full control of its demand curve.

Firms limit quantity supplied and charge high prices

to maximize profits. e.g. Celtel, Safaricom and

Telcom.

(iii) Oligopoly – Occurs where products are similar but

differentiated. There are a few sellers and no free

flow of information. Firms have full control of their

prices such that a price reduction by one firm is

quickly followed by competing firms to secure their

market share but a price increment by one

oligopolist is not necessarily followed by the other

firms. e.g. Shell, Kenol Kobil, Total, Caltex, in the oil

business in Kenya.

- Competition largely poses the problem of pricing that the

marketer must always try to resolve. The other competitive

forces are threat of new entrants, threat of substitute

products and bargaining power of suppliers.( See Porters

Model).

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ANALYSING THE COMPETITIVE ENVIRONMENT

There are two models commonly employed in analysis of the

competitive marketing environment of the organization:

1. Competitive Forces Model

2. SWOT analysis

MICHAEL PORTER AND THE COMPETITIVE FORCES MODEL

- The competitive forces model was developed by Michael Porter of Harvard University in 1980.

- He argues that the intensity of competition in an industry is neither a matter of coincidence or bad luck, but rather the way the industry is structured.

- He therefore identifies FIVE forces that he says influence the nature of competition in an industry. These include:

1. Threats of entry2. The supplier power3. Buyer power4. Substitute products5. Rivalry (jockeying for positions)

SWOT ANALYSIS

SWOT model is a summary of the pertinent characteristics of the

marketing environment that may affect the future business plans of a

business.

SWOT is an acronym standing for:

1. Strengths

2. Weaknesses

3. Opportunities

4. Threats.

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GROUP ASSIGNMENT

a) Distinguish between marketing intelligence and marketing

information

[10 marks]

b) Identify one organisation of your choice, and discuss how they

would go about conducting a marketing research to solve a

problem they are currently faced with.( Use the marketing

research process).

[20 marks]

REQUIRED

To be done in Groups of Five

Typed using Times New Roman font 12

Cover page

Attach reference page i.e. Harvard system of referencing

Spiral Bound

One report written and Submitted Two weeks from Today

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CONSUMER BUYING BEHAVIOUR

Consumer buyer behaviour is the behaviour exhibited by the final

users – Individuals and households who buy goods and services for

personal consumption.

Customer versus Consumer

A customer is one who buys the product from the seller. The consumer

is one who finally uses the product for own satisfaction. For instance a

mother buys ice-cream and the child eats the ice-cream. The mother is

the customer and the child the ultimate consumer. Marketers must

understand the consumer buying behavior and the customer buying

behaviuor.

Basic Model of Consumer Behaviour

The central question that concerns marketers is how do consumers

respond to the various marketing efforts the company employs? A

company that is able to precisely understand and supply customer

expectation of value tends to have an advantage over competition.

The model of buyer behaviour below has been presented by Kotler

(2006) in an attempt to explain the consumer buyer behaviour.

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Marketing and other Stimuli

Marketing Other

Product Economy

Price Technology

Place Political

Promotion Cultural

Buyers Black Box

Buyer BuyerCharacteristics

Decision

Process

Buyer Response

Product Choice

Brand Choice

Dealer Choice

Purchase Choice

Purchase amount

The figure shows that the marketing stimuli and other factors enter the

buyer “black box” and produce certain responses. Marketer’s stimuli

consist of all the marketing effort of an organization broadly captured

in the four P’s of Product, Price, Place and Promotion. Other stimuli

include major forces and events in the buyer’s environment i.e.

economic, technology, political and cultural forces.

After receiving a stimuli the buyers the enter a black box during which

the buyer thinks, weighs, chooses and makes a decision. The decision

making process is influenced by buyer characteristics as discussed

below.

The decision made is displayed in the buyer response comprising of

choosing a product, brand, dealer, purchase and quantity to purchase.

Marketers attempt to understand how the stimuli are converted to

response, and often manipulate the external stimuli to favour their

marketing offer.

CHARACTERISTICS AFFECTING CONSUMER BUYING BEHAVIOUR

The character of a consumer will largely be affected by the following

factors:

1. Cultural factors

2. Social factors

3. Personal factors

4. Psychological factors

1. Cultural Factors

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The marketer must understand the role played by the buyer’s

culture, subculture and social class.

(a) Culture – Culture affects a person’s wants and behaviour.

Growing up in a society a child learns basic values,

perceptions, wants and behaviours from the family and

other important institutions e.g. different cultures assign

different meanings to colour. White is usually associated

with purity and cleanliness in Western communities.

However it can signify death in Asian countries. Also

according to Taiwan culture, a man puts on green cloths to

signify his wife has been unfaithful.

(b) Subculture – Subculture include nationalities, religions,

racial groups, and geographic regions. Many subcultures

make up important market segments and marketers often

design products tailored to their needs e.g the Black

Americans in the United States are strongly motivated by

quality and selection. They place more importance on

brand names and are more brand loyal.

(c) Social class – Social classes are society’s relatively

permanent and ordered divisions whose members share

similar values, interests and behaviours e.g. of social class:

upper class, middle class, lower class.

Social class is determined by many factors like income,

occupation, education, wealth and other variables.

Marketers are interested in social class because people

within a given social class tend to exhibit similar buying

behaviour. Social classes show distinct product and brand

preferences in areas like clothing, home furnishings,

automobiles etc.

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2. Social Factors

The buyer’s behaviour may also be influenced by social factors,

such as groups, the family, social roles and status.

(a) Groups - Groups are combinations of two or more people

who have come together or interact to accomplish

individual or mutual goals.

A group member is influenced by the other members as

he/she strives to belong. Marketers try to identify the

reference groups of their target markets. Reference

groups expose a person to new behaviours, lifestyles and

create pressure to conform e.g. a group of young people

can be attracted to the football game and would wish to

put on branded products just like the football player whom

they wish to imitate.

(b) Family

Marketers are interested in the roles and influence of the

husband, wife, children and house help on the purchase of

different products and service. In most families, the wife is

the main buyer of food, household products and clothes.

The husband is the main buyer f hardware, car or even a

home. However changes in the market trend have seen

women take up the reverse roles.

Children and house helps are the main consumers of T.V.

adverts and may from time to time influence the family

buying decisions.

(c) Roles and Status

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A role consist of the activities a person is expected to

perform according to the people around them e.g Mary is a

daughter to her parents, she plays the role of a daughter,

in her family, she plays the role of a wife, in her company

she plays the role of the brand manager. Each of her roles

influences her buying behaviour.

3. Personal factors

These are common individual characteristics that can influence

one’s behaviour or decisions. They include the buyer’s age and

life cycle stage, occupation, economic situation, lifestyle,

personality and self concept.

(a) Age and Lifecycle Stage

Marketers often define their target markets in terms of the

life-cycle stage and develop appropriate products and

marketing plans for each stage.

Traditionally family life-cycle include young singles,

married couples with children, and the elderly. Markets

strive to capture brand loyalty of consumers at a young

age and develop long term relationship.

(b) Economic Situation

Economic situation of an individual affect his/her buying

ability. A high income earner has more income to spend

and a low income earner has little income to spend.

Marketers of income sensitive goods watch trends in

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personal income, savings and interest rates. During

economic recession, marketers must re-price reposition or

even redesign their products.

(c) Lifestyle

Lifestyle is a person’s pattern of living as expressed in his

or her activities, interest and opinions. Marketers classify

people based on how they spend their money and time as

follows:

(i) Status oriented buyers – Base their purchases on the

actions and opinions of others.

(ii) Action oriented buyers – Are driven by their desire for

acting, risk taking and variety.

(iii) Principle oriented buyers – Consumers who buy

based on their views of the world.

Based on lifestyle, consumers can also be classified as:

(i) Actualisers – People with so many resources that

they can indulge in any of the orientations above.

(ii) Achievers – People with middle income and just

enough resources. They strive to be actualisers and

are often status oriented.

(iii) Strivers – People with little resources and are

principle oriented.

(iv) Strugglers – People with too few or no resources.

They are often not included in any consumer

orientation.

Lifestyle study is used by marketers to design appropriate

adverts for each class of consumers.

(e) Personality and Self-concept

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Personality is the distinguishing psychological

characteristic that leads to relatively consisted and lasting

responses to one’s own environment.

Personality can be described as self-confident, dominant,

social, defensive, adaptable and aggressive.

Personality is useful in analyzing consumer behaviour for

certain products e.g. coffee marketers have discovered

that heavy coffee drinkers are highly sociable.

4. Psychological Factors

A person’s buying choices are further influenced by

motivation, perception, learning, beliefs and attitudes.

(a) Motivation

A motive (drive) is a need that is sufficiently pressing to

direct the person to seek satisfaction.

Many marketers develop adverts bearing in mind their

products ability to quench the buyers motive e.g. the Pepsi

slogan “dear for more”, The Sprite advert “obey your

thirst”, Nakumatt slogan “You need it you get it”, Toyota

Pickup advert, ‘Shujaa wa Kazi’ etc.

(b) Perception

Perception is the process by which people select, organize

and interpret information for form a meaningful picture of

the world. There are three perceptual processes:

(i) Selective attention

(ii) Selective distortion

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(iii) Selective retention

Selective attention is the tendency for people to screen

out most of the information to which they are exposed e.g.

consumers in Kenya are exposed to over 1,000 adverts

everyday. Do they pay attention to any of them?

Marketers must strive to capture consumer attention.

Selective distortion is the tendency of people to

interpret information in a way that will support what they

already believe. Marketers must try and understand the

mindset of consumers and how this will affect

interpretations of adverts and sales information.

Selective retention is the tendency of people to retain

information that supports their attitudes and beliefs. This

explains why marketers use so much drama and repetition

in sending messages to their market e.g. action hits pain

hard, Doom advert etc.

(c) Learning

Learning describes changes in an individual’s behaviour

arising from experience. Most human behaviour is learned.

Learning occurs through the interplay of drives, stimuli,

cues, responses and reinforcement e.g if a consumer buys

a Nokia phone, if his experience with the phone is

rewarding he will in future reinforce this behaviour by

buying it again. But if it is not rewarding he will not

reinforce the need for that product.

(d) Beliefs

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A belief is a descriptive thought that a person has about

something e.g. Kenyans have an attitude that Nissan cars

are not durable on Kenyan roads and are highly in favour

of Toyota cars. These beliefs may be based on real

knowledge, opinion or faith.

Marketers must understand the beliefs that people

formulate about a specific product because the belief make

up product and brand images.

If some beliefs are wrong and prevent purchase, a

marketer launches a campaign to correct them e.g. the Jik

advert on detergents that bleach and tear your garments,

the Nissan X-trail advert that depicts Nissan on rough

roads.

(e) Attitudes

Attitude is a person’s consistently favourable or

unfavourable evaluation, feelings and tendencies toward

an object or idea e.g. people have the attitude that

Japanese electronics are quality products while Chinese

electronics are poor quality products.

A marketer must understand people’s attitudes and try to

change them to their benefit.

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TYPES OF BUYING-DECISION BEHAVIOUR

There are four types of buying behaviour:

1. Complex buying behaviour

2. Dissonance reducing buying behaviour.

3. Habitual buying behaviour

4. Variety seeking buying behaviour

High Involvement Low Involvement

Significant

difference between

brands

Complex buying

behaviour

Variety seeking

buying behaviour

Few difference

between brands

Dissonance reducing

buying behaviour

Habitual buying

behaviour

Complex Buying Behaviour

This is a buying behaviour characterized by high consumer

involvement in a purchase and significant perceived differences among

brands.

The consumer involvement is high when the product is expensive,

risky, purchased infrequently and it is highly self expressive. Hence

the consumer has a lot to learn about the product e.g. buying a

computer, car etc. The buyer first develops beliefs about the product,

then attitudes, and then makes a thoughtful purchase choice.

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Marketers of high involvement products must help buyers learn about

the product benefits and features. They can do this by availing a

catalogue or describing the brands benefits using print media.

Dissonance – Reducing Buying Behaviour

This is a buying behaviour that occurs when consumers are highly

involved with an expensive infrequent or risky purchase, but sees little

difference among brands e.g. buying a music system, a carpet etc.

A consumer buying a music system may face a high involvement

decision because the system is expensive and self-expressive yet

buyers may think all the music systems in a given price range are the

same. After purchase a consumer might experience post-purchase

dissonance (discomfort). The marketers must provide after sales

services and reassure the consumers that all is well.

Habitual Buying Behaviour

It is a consumer buying behaviour characterized by low consumer

involvement and a few significant perceived brand differences.

For example bread. Consumers have little involvement in this product

category, they simply go to a shop and pick a loaf of bread. If they

keep buying the same brand, it is out of habit rather than strong brand

loyalty. Consumers appear to have low involvement with low priced

products.

Because buyers are not committed to any brands, marketers of low-

involvement products will use price and sales promotions to create

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brand familiarity. Television ads are more effective in such

promotions.

Variety-Seeking Buying Behaviour

This is a consumer buying behaviour characterized by low consumer

involvement but significant perceived brand differences.

For example cooking fat. A consumer may buy Kasuku brand without

much evaluation then evaluate the brand during consumption. Next

time the consumer may buy Tily, yet another time Kimbo. Brand

switching occurs for the sake of variety rather than because of

dissatisfaction.

For such products, the marketing strategy may differ for the market

leader and for followers. The market leader will try to encourage

habitual buying behaviour by dominating shelf space, running frequent

reminder adverts e.g. Kimbo, Kasuku. Challenging firms will encourage

variety seeking by offering lower prices, special deals, and free

samples e.g. Mpishi Poa.

CONSUMER BUYING ROLES

Purchasing decisions are made by various people from the initiation of

a purchase idea to the final purchase of the product. The following are

the various roles in the consumer buying process:

1. The Initiator – This is the person who first suggest or thinks of the

idea of a particular product or service.

2. The Influencer – This is the person in the active buying process

whose views or advice influence the buying decision.

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3. The Decider – This is the person who finally makes the final

buying decisions, or any part of it. This includes the decisions on

whether to buy, when to buy, how to buy and from whom to buy.

4. The buyer – This is the person who finally makes the actual

buying. He carries out the actual and physical purchase of the

object.

5. The User – This is the person who uses the purchased product.

In marketing there is a great need to differentiate between the

customer and consumer of the product.

A marketer must know these roles in order to help him/her develop a

systematic way of evaluating and negotiating a purchase especially for

organizational markets.

THE BUYER DECISION PROCESS

A consumer goes through a series of rational steps in the buying

decision process. These include:

1. Need Recognition

At this decision stage, the buyer recognizes a problem or need.

The buyer senses a difference between his actual state and some

desired state.

A need can be triggered by internal stimuli when one of the

persons needs e.g. hunger, thirst, desire etc. rises to a level high

enough to become a drive. The need can also be triggered by

external stimuli like an advert or a sales person talking of the

product.

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The marketer at this stage should carry out market research to

understand consumer needs and looks for ways of satisfying

them.

2. Information Search

The stage in which the consumer is aroused to search for more

information. The consumer may move from a state of active

information search to a state of heightened attention where the

consumer actively seeks information from:

(a) Personal sources (family, friends, neighbors)

(b) Commercial sources (advertising, salespeople,

dealers)

(c) Public sources (mass media, consumer awareness

org.)

(d) Experimental sources (handling, examining, using

the product)

Companies have realized that people who ask others (word of

mouth sources) end in buying. It is convincing and a more cost

effective strategy.

3. Evaluation of Alternatives

At this stage, the consumer uses information to evaluate

alternative brands in the choice set. Consumers sometimes make

careful calculations and logical thinking of the product benefits

and features (complex buying behaviour). At other times,

consumers do little or no evaluation, instead they buy on impulse

and rely on intuition. Some other times consumers make buying

decisions on their own, sometimes they turn to friends, consumer

guides or salespeople.

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Marketers should study buyers to find out how they actually

evaluate brand alternatives.

4. Purchase Decisions

- At this stage, the buyer makes a decision of which brand to

buy. Two factors may influence the buyers’ decision at this

stage:

(a) Others attitude over the product i.e. view of

friends/relatives

(b) Unexpected situational changes e.g. change in

product price, change in buyers income etc.

5. Post-purchase Behaviour

- At this stage, the consumers take further action after

purchasing the product based on their satisfaction or

dissatisfaction.

- If the product falls short of expectations, the consumer is

disappointed (cognitive dissonance). If it meets

expectations, the consumer is satisfied, if it exceeds

expectations, the consumer is delighted.

- Marketers must at all times strive to satisfy the consumer

in order to retain the existing customers and get new

customers.

THE BUYING DECISION PROCESS FOR A NEW PRODUCT

A new product is a good or service or idea that is perceived by some

potential customers as new.

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New products take sometime before they are finally adopted for use by

the consumers. The process through which a new idea or product is

received and consequently accepted is referred to as the adoption

process.

Adoption Process

This is the mental process through which an individual passes from

first hearing about an innovation to final acceptance of the product.

Stages in the Adoption Process

Consumers go through five stages in the process of adopting a new

product:

(i) Awareness – The consumer gets to know of the new product,

but lacks information about it.

(ii) Interest – The consumer seeks information about the new

product.

(iii) Evaluation – On receiving additional information on the product,

the potential consumer make a consideration as to whether

trying out the new product makes sense.

(iv) Trial – The consumer makes a trial of the new product on a small

scale. This is to help in estimation of the products value.

(v) Adoption – On receiving full satisfaction after the trial, the

consumer decides to make full use and adoption of the new

product.

Adoption Rate of a New Product

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14%EarlyAdopters

34%EarlyMajority

34%LateMajority

16%Laggards

3%Innovators

According to Rogers theory of innovation, people differ greatly in their

readiness to try new products. There are five groups of people based

on their adoption rate.

(i) Innovators – Are venturesome. They try new ideas as soon as

they get to know of it irrespective of the risk.

(ii) Early adopters – They are guided by respect. They are opinion

leaders in their communities and adopt new ideas early but

carefully.

(iii) Early majority – They are rarely leaders but they adopt new ideas

before the average person.

(iv) The late majority – Are skeptical individuals. They adopt an

innovation only after a majority of people have tried it.

(v) Laggards – Are traditions bound – They are suspicious of changes

and adopt the innovation only when it has become something of

a tradition itself.

Rogers classified these grioupings as shown below:

In general, innovators and early adopters are relatively younger, better

educated, and higher income than late adopters and non adopters.

Marketers with new innovations should research the characteristics of

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innovators and early adopters and should direct marketing efforts

towards them.

INDUSTRIAL MARKETING

It is the managerial effort directed toward satisfying wants and needs

of organization through the exchange process. It also referred to as

Business to Business Marketing

Definition of industrial goods

These are goods intended for use in the making of other products or

for rendering a service in the operation of a business or institutional

enterprise. Examples of Industrial goods: steel, cement, mechanical

equipment, factory tools, office desks etc

The General Characteristics of the Business Markets

1. Has fewer buyers in number

2. Has larger buyers in terms of quantity demanded

3. Has close suppliers to buyer relationship

4. Has geographical concentration of buyers

5. Buying is derived demand dependent

6. Inelastic demand: not affected by price much

7. Fluctuating demand

8. Professional purchasing

9. Has several buying influences

10.Direct purchasing: not via intermediaries

11.Possibility of purchase reciprocity

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Who influences the buying process in organization?

(Participants)

1. The Initiator – Is the person who first identifies a need to buy within

the organization

2. The User – The organization members who use the product and

service

3. The Influencer: Those individuals inside or outside the organization

who influence the decisions process by providing information on

criteria for evaluating buying alternatives or by establishing

product specifications. Includes Technical people like Design

Engineers, Quality Control Inspectors etc.

4. The Approvers – Include individuals who agree to the buying

decision based on resource availability mostly fro the Finance

department.

5. The Decider – Those organizational members who have formal or

informal authority to actually make the buying decision e.g. the

CEO

6. The Buyer – Is an organizational member with formal authority to

select the suppliers and implement the procedures involved in

purchasing e.g. Purchasing officer

7. Gatekeepers – Are organizational members who control the flow of

information into the buying centre e.g. The Purchasing Manager,

Secretary, Receptionist etc

The Seven are also referred to as the buying centers. Buying centers

are key groups of persons within the organization who influence the

decisions on what is bought in the organization.

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1. Buying managers in industrial markets are known to assume some

common of roles in a buying process. These roles are classified into six groups.

identify and discuss them

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CUSTOMER DRIVEN MARKETING STRATEGY

Companies today recognize the fact that they cannot appeal to all

buyers in the market place in the same way. Thus firms have moved

away from mass marketing to target marketing i.e. identifying market

segments selecting one of them and developing products and

marketing programmes tailored to them. The major steps toward

designing a market driven marketing strategy include:

(i) Market Segmentation

(ii) Market Targeting

(iii) Market Positioning

(iv) Differentiation

MARKET SEGMENTATION

Market segmentation means dividing a market into distinct groups with

distinct needs, characteristics or behaviour who might require separate

products or market mixes.

A market segment is a group of customers who respond in a similar

way to a given set of marketing effort. The main strategies used in

segmenting consumer markets are; Geographic, Demographic,

behavioral and economic factors

(a) Geographic Factors

Geographic segmentation means dividing a market into different

geographical units such as nations, states, regions, cities, etc.

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Many companies in Kenya segment the country into five regions,

Nairobi, Mountain, Rift Valley, Nyanza and Coastal.

Companies do localize their products, advertising, promotion and sales

efforts to fit the needs of individual regions e.g. Daily National Nairobi

edition.

(b) Demographic Segmentation

Divides the market into groups based on variables such as age,

gender, family size, family life cycle, income, occupation, education,

religion, race, generation and nationality.

Using these variables, the market could be segmented as follows:

Based on age (children, youth, and adults), based on income (high

income, middle income, low income), and based on gender (for men,

women). Most cosmetic products are specially designed, promoted

and advertised to reinforce the feminine image e.g. Nivea.

(c) Behavioural Segmentation

Divides buyers into groups based on their knowledge, attitudes,

uses or response to a product. The segments that emerge

include:

(i) Occasion segmentation – Divides the market into groups

according to occasions when buyers get the idea to buy,

actually buy or use the purchased item e.g. coffee for cold

season.

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(ii) Benefit Segmentation – Divides the market into groups

according to the benefits that consumers seeks from the

product e.g for a laundry detergent like Omo, Sunlight, Jik,

etc. customer are segmented on the basis of benefits

sought e.g. The product gives benefits like cleaning, fabric

softening, strengthening and fresh smell.

(iii) Loyalty Status – A market can be segmented by consumer

loyalty. Consumers can be loyal to brands (Nike), stores

(Nakumatt, Wal-mart, Bata) and companies (Toyota, Ford).

Buyers can be divided according to loyalty as; completely

loyal, somewhat loyal or not loyal. A company can target

the less loyal customers and turn them to loyal customers.

(d) Economic Factors

Segments the market based on the economic strength of the

people. The market could be grouped into; upper market,

medium range and lower market. A shop in Moi Avenue could be

in the upper market, a shop on Tom Mboya Street medium range

and a shop in River Road lower market.

Importance of Segmentation

(a)It’s an acknowledgement that people are different and special

(b)It helps marketers define customer needs more precisely

(c) Helps marketers in developing market mixes and products to

meet need

(d)Helps in the allocation of resources because segments differ in

sizes

(e)Provides better evaluation of marketing performance in

segments

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Requirements for effective segmentation

1. Measurable – The size, purchasing power and profiles of

segments can be measured.

2. Accessible – The market segment can be reached and served.

E.g if your target market is school going students, the best time

to advertise is in the evenings.

3. Substantial – The market segments should be large and

profitable enough to serve e.g Toyota targets the African market

with economical cars, because the larger populations are

medium income earners.

4. Differentiable – The segments are conceptually distinguishable

and respond differently to different market mix elements and

programs e.g people in rural areas are price sensitive and averse

to highly price urnanites are less price sensitive.

5. Actionable – Effective programs can be designed for attracting

and serving the segments.

MARKET TARGETING

A target market is a set of buyers sharing common needs or

characteristics that the company decides to serve e.g. wholesalers who

stock cooking oil products could be a target market for a cooking oil

manufacturer like Bidco.

Market Targeting Strategies

After analyzing the various segments, the company must then decide

on the method to use in approaching the market. The strategies for

selecting a target market include:

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(i) Undifferentiated marketing

(ii) Differentiated marketing

(iii) Concentrated marketing

(iv) Micromarketing

Undifferentiated Marketing (Mass Marketing)

This is a situation in which a firm decides to ignore the various market

segments and go for the whole market with one type of product using

one form of marketing mix e.g. mass advertising of Equity Bank, mass

distribution of Jogoo maize flour, mass promotional campaigns of Coca-

Cola.

The main advantage of this strategy is that it is a cost saving approach

The main undoing of this strategy includes:

Makes a firm unimaginative Makes a firm vulnerable to competition

Differentiated Marketing (Segmented Marketing)

Using this strategy, a firm decides to target several market segments

and designs separated offers or market mix for each e.g. Toyota has

differentiated markets as follows:

(i) Toyota Prado/Lexus – For consumers who care about size,

strength, safety and not price.

(ii) Toyota Corolla – For consumers who care about fuel consumption

and are price sensitive.

The main advantage of this strategy is that may yield financial success with economies of scale in production and marketing.

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The main disadvantage of this strategy is that it is very costly strategy.

The high cost originates from; Product design cost, promotion costs for

different markets, inventory cost for various markets, research cost

amongst others.

Concentrated Marketing (Niche Marketing)

This is a strategy where a firm selects a market niche and concentrates

on it. It involves offering one product to one specific group.

Is especially appealing when company resources are limited. Instead

of going after small share of large markets, the firm goes after a large

share of one or a few segments or niches e.g. KCB has branches all

over the country, I & M Bank, has branches only in cities i.e. Nairobi,

Kisumu, Mombasa. I & M is applying niche marketing.

Micromarketing (One to One Marketing)

Micromarketing is the practice of tailoring products and marketing

programmes to suit the tastes of specific individuals and locations. It is

broadly divided into local marketing and individual marketing.

Local marketing is tailoring brands and promotions to the needs and

wants of local customer groups i.e. cities, neighborhoods or specific

stores

Individual marketing is the tailoring of products and marketing

programs to the needs and preferences of individual, customers also

called one to one marketing.

DIFFERENTIATION AND POSITIONING

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Product positioning means the way the product is defined by

consumers on important attributes i.e. the place the product occupies

in the mind of the consumers relative to competitors products. One

positioning expert once commented that “products are created in the

factory, but brands are created in the mind”

Toyota 110 is positioned as an economical car, Volvo positions on

safety and Mercedes is a luxuriuorise car, Hummer positioned on a

very high performance with a price tag to match.

Examples of positioning slogans:

(a)Safaricom: The better option

(b)Nakumatt: You need it we’ve got it

(c) Nation newspaper: The Truth

(d)Mash : We lead the leaders

(e)Kenya Airways: The pride of Africa

(f) Lexus: The passionate pursuit of excellence

(g)Mercedes: In a perfect world, everyone would drive a Mercedes

The Nature of Positioning

Positioning assumes that consumers compare products along

important features. To simplify the buying process, consumers

organize companies, products and services into categories and

position them in their minds

Positioning must clearly indicate these features lest it fails. The

marketer must position the market offer so that it gives them the

greatest possible advantage

Marketers must come up with excellent positioning maps. A

positioning map is an effort of the marketer to show consumer

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perception of their brands versus competing products on

important dimensions.

Positioning must be built around a differentiation gimmick

Marketing mix is used to facilitate positioning

Poor Positioning May Lead to:

1. Undesirable positioning: head on with stronger competition

2. Undesirable position: Position without demand from customers

3. Fuzzy positioning: Nobody knows what the distinctive feature

really is.

4. No positioning: Nobody has heard of the positioning

Bases for Positioning a Product

1. Benefits2. Price and quality combination3. Uses and application4. Product user position5. Product class position6. Positioning against Competitor (comparative)7. Origin positioning

Choosing a Differentiation and Positioning StrategyPositioning task takes four steps:(1) Identifying a set of possible competitive advantages(2) Choosing the right competitive advantages(3) Selecting an overall positioning strategy(4) Developing a Position Statement

(1) Identifying Possible Competitive Advantage

- A competitive advantage is an advantage over competitors

gained by offering consumers greater value, either through

lower prices or by providing more benefits that justify

higher prices.

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- A company’s marketing offer must be differentiated from

those of competitors along the lines of product attributes,

services quality, channels, people or physical evidence.

- The company must constantly compare the customer

satisfaction of its products, prices, channels and promotion

with those of chosen competitors.

(2) Choosing the Right Competitive Advantage

Sometimes a company realizes that it has several advantages

compared to competitors. It then has to choose how many

differences to promote and which ones.

HOW MANY DIFFERENCES TO PROMOTE – Often companies

choose one unique feature and insist that they are number

one in that area. But a company can also promote a

number of differences.

WHICH DIFFERENCES TO PROMOTE – Not all differences are

worth promoting. A difference is worth establishing to the

extent that it satisfies the following criteria: Important,

Distinctive, Superior, Communicable, preemptive (robust),

affordable and profitable.

(3) Selecting an overall positioning strategy

The full positioning of a brand is called value positioning.

Value positioning tells the customer everything about the

benefits they will get from a brand. There are four approaches

to value positioning i.e. More for more(pay more get more

value), more for same, the same for less, less for much less

and more for less.

(3) Developing a Position Statement

- A positioning statement summarizes company or brand

positioning.

- A good positioning statement should follow this form:

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To (target segment and need) our (customers), our (brand)

is (concept) the best in the market (point of difference).

e.g to all trendy men, Sir Henrys Suits offers the latest

designer suits, specially tailored to fit the modern fashion

and a look of elegance. Non compares with us in men’s

wear.

“Sir Henrys, the best a man can get.”

Challenges of Positioning

(a)Over positioning

(b)Under positioning

(c) Confused positioning

(d)Doubtful positioning: Buyers cannot believe

Tools to Facilitate Positioning1. Advertising

2. Pricing

3. Personnel

4. Product features

5. Branding

6. Slogan

7. Service environment

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MARKETING INFORMATION SYSTEMS AND MARKETING

RESEARCH

Marketing Information System (MIS)

Two definitions of a marketing information system (MIS) are:

(a) “A structured, interacting complex of persons, machines and

procedures designed to generate an orderly flow of pertinent

information, collected from both intra- and extra-firm sources, for

use as the basis for decision making in specified responsibility

areas of marketing management”.

(b) A system that “consists of people, equipment, and procedures to

gather, sort, analyse, evaluate and distribute needed, timely and

accurate information to marketing decision-makers”. (Phillip

Kotler).

These definitions imply that MIS is a system that is carefully designed

to process and avail pertinent and timely information to marketing-

decision makers.

The Components of MIS

A firm's marketing information system usually consists of four main

components: Internal Records System, Marketing Intelligence System,

Marketing Research System, and Marketing Decision Support System.

(a) Internal Records System (Internal Database)

The most basic information system used by marketing managers

is the "internal records system" or internal database". Internal

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records information" is information gathered from sources within

the organisation to evaluate marketing performance and to

detect marketing problems and opportunities. This information

may be largely derived from accounting database and may

include reports on sales, prices, accounts opening and closures,

customers' financial information and so on.

(b) Marketing Intelligence System (External Database)

While the internal records system supplies marketing managers

with "results data", the marketing intelligence system supplies

managers with "happenings data". Marketing intelligence

information is everyday information about developments in the

marketing environment that helps marketing managers prepare

and adjust marketing plans.

In many respects the marketing intelligence system can be

regarded as the "external database" of MIS because it covers all

types of information collected from external sources. It may take

the form of press cuttings, trade journals, discussions and

information from competing organizations or subscriptions to

some specified external database.

(c) Marketing Research System

The marketing research system is that component of the MIS

which gathers information by means of deliberate planned

focused studies on specific marketing problems facing the

organisation. Besides information from internal and marketing

intelligence sources, marketing managers often need focused

studies of specific problems and opportunities. For example, they

may need a market survey, a product-preference test, a sales

forecast by region or an advertising-effectiveness study.

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Marketing research information is used to identify and define

marketing opportunities and problems, to generate, refine, and

evaluate marketing actions; to monitor marketing performance;

and to improve understanding of the marketing process.

(d) Marketing Decision Support System

The marketing decision support system consists of a series of

analytical techniques which enable marketing managers to

process, interpret and make full use of information provided by

the other three sources. Various statistical tools, decision

models, systems and the use of microcomputer software and

high level programming may be integrated in the marketing

decision support system depending on the marketing decision-

makers information needs. The most commonly used decision

support systems include:

1. Time series sales models

2. Linear Programming

3. Analysis of variance (ANOVA) models

4. Regression and correlation models

The Role of MIS

In order to carry out their analysis, planning, and implementation and

control responsibilities, marketing managers need information about

developments in the marketing environment. The role of MIS is to:

a) Assess the manager's information needs;

b) Develop the needed information; and

c) Distribute the information in a timely fashion to the marketing

managers.

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The Marketing Research System

(a) Marketing Research Versus Market Research

According to Kotler (2001), marketing research is the systematic

design, collection, analysis, and reporting of data and findings

relevant to a specific marketing situation facing the company.

The American Marketing Association defines marketing research

as the systematic gathering, recording and analyzing of data

about problems relating to the marketing of goods and services.

Marketing research should not be confused with market

research, which refers to finding out information about the

market for a particular product or service.

The fundamental differences between marketing research and

market research are that:

Market research is a formal procedure for researching into

an identified market. It studies a market for a particular

product or service. The scope of market research activities

is limited to an identified "market" (or group of customers).

Marketing research is a formal procedure for researching

the entire marketing activity of an organisation.

Thus, market research is only one of the elements of marketing

research. Marketing research is broader than market research

and includes not only market research but also covers a wide

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variety of variables (pricing, distribution, advertising, etc) that

can affect the marketing of goods and services.

(b) Marketing Research System Versus Marketing

Information System (MIS)

Many people often confuse between the marketing research

system and MIS. Although the two systems share a common

purpose, i.e. providing information for marketing decision-

makers, some fine lines of contrast exist. These include the

following:

The focus of marketing research is on the handling of

external information while MIS handles both internal and

external information.

Marketing research is concerned with solving problems

while MIS is concerned with preventing as well as solving

problems.

Marketing research tends to operate on an ad hoc and

project-to project basis while MIS is a continuous process

especially in connection to the monitoring of the external

environment.

Marketing research tends to concentrate on past

information while MIS tends to be future oriented.

MIS, is often computer-based while a marketing research

system is not necessarily computerized.

A marketing research system is just one component of MIS

while MIS consists of other components (i.e. internal

records, marketing intelligence and marketing decision

support systems) besides marketing research.

(c) Importance of Marketing Research

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The importance of Marketing and Market research arise from the

fact that they provide information which can be used by

marketing decision makers. If the information provided is

accurate, reliable and timely, its use should reduce the risk

involved in decision making and thus increase the chances of

making the right choice as well as the opportunity for greater

monitoring and control of marketing operations.

Marketing research can help an organisation’s marketing

decision marker with the following decisions or questions:

What is the size of the market for a particular organisation

services?

Who are the organisation’s customers?

What are the organizations’ buying motives?

What are the trends in the market?

Is the organisation’s advertising well received?

Are customers satisfied with the organisation’s products?

What are the most attractive/least attractive features of

the organisation’s products compared to competitor's

products?

What is the size of the organisation’s market share?

When should an organisation launch a new product?

Why has the organisation lost customers to competitors?

etc.

The Marketing Research Process:

The six main stages in the research process are as follows:

1. Defining the problem

2. Defining the research objectives

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3. Developing the research design

4. Collecting the data

5. Analysing the data and

6. Presenting the findings

1. Defining the Problem

Defining the problem and the research objectives is the first and most

important step in the research process. A research problem is the

question or issue to be studied. It defines the focus of the study and

the direction of the research effort and resources.

Why must Research Problem be defined appropriately?

1. Because Research problem is the baseline foundation for any

research project.

2. No problem, No Research!

3. Wrong Problem, Wrong Research!

4. Unless the problem is well defined, the cost of information gathering

may well exceed the value of the findings

An old adage says, "A problem well defined is a problem half solved".

Defining the problem is often the hardest step in the research process.

A problem should not be defined too broadly nor too narrowly. If

management fails to define the problem clearly exploratory research

may be required to help bring the problem into focus.

2. Research Objectives

When the problem has been carefully defined, the marketing manager

and researcher must set the research objectives, that is, the outputs or

end results of the research effort.

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3. Developing the Research Plan (Research Design)

Research design is the framework or plan for the study used as a guide

in collecting and analysing data.

There are three types of research design that researchers often use:

i) Exploratory Research Design – Involves gathering

preliminary data to shed light on the nature of the problem

and possibly suggest some hypotheses or new ideas.

ii) Descriptive Research Design - Involves describing

certain variables of interest to the researcher. This is a

research design in which the major emphasis is on

determining the frequency with which something occurs or

the extent to which two variables co-vary

iii) Causal Research Design - Involves testing hypotheses

about cause and effect relationships e.g. does X cause Y?

Managers often start with explanatory research and latter follow with

descriptive or causal research. The research plan calls for decisions on

the data sources, research approaches, research instruments,

sampling plan and contact methods.

4. Data Collection

Data Sources

To meet the manager's information needs the research plan can call

for gathering secondary data, primary data, or both.

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Secondary data consist of information that already exists

somewhere having been collected for another purpose. The

internal sources of secondary data for an organisation

include the profit loss statements, balance sheets, sales

figures, sales-call reports, invoices, inventory records, and

prior research reports. External sources of secondary data

include government publications, periodicals and books,

and commercial data.

Primary data consist of original information gathered for

the specific purpose at hand. The normal source of primary

data is through direct interviewing of individuals or groups

of people.

Researchers usually start their investigation by reviewing literature on

secondary data to see whether their problem can be partly or wholly

solved without collecting costly primary data. Secondary data offer the

advantages of lower cost and quicker availability. On the other hand,

the data needed by the researcher might not exist, or the existing data

might be outdated, inaccurate, incomplete, or unreliable. In this case,

the researcher will have to collect primary data at greater cost and

longer delay but probably with more relevance and accuracy.

Research Approaches

Primary data can be collected in four broad ways: observation, focus

group, surveys and experiments.

Observational Research - is the gathering of primary data by

observing relevant people, actions and situations. It is best suited for

exploratory research purposes.

Focus - Group Research - is the gathering of primary data through

personal interviewing of a group that consist of six to ten people

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gathered for a few hours with a trained interviewer to talk about a

product, services or organization.

Focus-group research is a useful exploratory step to take before

designing a large - scale survey. It yields insights into consumer

perceptions, attitudes, and satisfaction that help define the issues to

be researched more formally. However, the interviewer needs

objectivity, knowledge of the subject matter and industry, and

knowledge of group dynamics and consumer behaviour otherwise the

results can be misleading.

Survey Research - the gathering of primary data by asking people

questions about their knowledge, attitudes, preferences, and buying

behaviour. Survey research stands midway between observational and

focus-group research, on the one hand, and experimental research on

the other hand.

Experimental Research - the gathering of primary data by selecting

matched groups of subjects, subjecting them to different treatments,

controlling extraneous variables, and checking whether observed

differences are statistically significant.

Experimental research is the most scientifically valid research. To the

extent that extraneous factors are eliminated or controlled, the

observed effects can be related to the variations in the stimuli. The

purpose of experimental research is to capture cause-and-effect

relationships by eliminating competing explanations of the observed

findings.

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Application of Research Approaches

Generally speaking, observation and focus groups are best suited for

exploratory research, surveys are best suited for descriptive research,

and experiments are best suited for causal research.

Research Instruments

Marketing researchers have a choice of two main research instruments

in collecting primary data: the questionnaire and mechanical devices.

1. Questionnaires: This is by far the most common instrument in

collecting primary data. Broadly speaking a questionnaire

consists of a set of questions presented to respondents for their

answers. The questionnaire is very flexible in that there are

many ways to ask questions. Questionnaires must be carefully

designed and tested before they can be used on a large scale.

2. Mechanical devices: These are less frequently used in

marketing research e.g. use of supermarket scanners and

surveillance cameras.

Sampling Plans

The marketing researcher must design a sampling plan which calls for

three decisions: Target population, sample size and sampling

procedure:

Target population. This answers, who is to be surveyed?

The marketing research must define the target population

that will be sampled.

Sample Size: This answers, how many people should be

surveyed?

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Large samples give more reliable results than small

samples. A sample is a segment of the population selected

for marketing research to represent the populations as a

whole.

Sampling Procedure: This answers, how should the

respondents be chosen? To obtain a representative

sample, probability sampling is usually used.

Contact Methods

This answers "How the subject should be contacted?" The

choices are mail, telephone, or personal interviews.

The mail questionnaire is the best way to reach

individuals who would not give personal interviews or

whose responses might be biased or distorted by the

interviews. Mail questionnaires require simple and clearly

worded questions, and the response rate is usually low

and/or slow.

Telephone interviewing is the best method for

gathering information quickly; the interviewer is also able

to clarify questions if they are not understood. The

response rate is typically higher than in the case of mailed

questionnaires. However, only people with telephones can

be interviewed and interviews have to be short and not too

personal.

Personal interviewing is the most versatile of the

three methods. It provides additional observations about

the respondent, such as dress and body language. Its main

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drawbacks are that it is the most expensive method and

requires more administrative planning and supervision. It is

also subject to interviewer bias or distortion.

(c) Collection of Data

After developing the research plan the researcher must collect

the data. This will involve:

i) Administering the questionnaire;

ii) Conducting in-depth interviews or group discussions with

the selected sample;

iii) Conducting discreet observations so that the targets do not

realize they are being observed and hence their behaviour;

iv) Conducting experiments.

(d) Analyzing the Data

The next step in the marketing research process is to extract

pertinent findings from the data. Depending on the type of

collection methods, the results will be analyzed accordingly:

Questionnaires will have to be pre-coded or input into a

computer by the interviewer.

Answers to in-depth interviews would be analysed by

identifying key statements from the interviews, and

common characteristics and attitudes identified.

The researcher will tabulate the data and develop one-way

and two-way frequency distributions.

Averages and measures of dispersion will be computed for

the major variables, etc.

5) Analyzing the Data

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The questionnaire is checked for completeness, comprehensibility and

legibility. The questionnaire is coded and transcribed. Once the data is

input in a computer it is then analyzed using computer spreadsheet

packages like excel , SPSS etc.

6) Presentation of the Findings

Involves the following two:-

a) Interpretation and collection of the results

b) Presentation of results

The information generated from the computer is interpreted often

using frequencies and percentages. The otherwise separate

information is collected to form one or a few meaningful points.

After interpretation the service researcher comes up with

recommendations to help solve the problem.

The researcher then writes a final report about the research findings. A

good research report must have:

a) A title page

b) Content page

c) Executive summary

d) An introduction

e) Terms of reference (objectives of the research)

f) The methodology of research

g) The main findings

h) Conclusions and recommendations

Oral Presentation

If the researcher is required to make an oral presentation of the study

the researcher should take into account the following factors:

a) The original research problem and objectives

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b) The extent to which the problem has been solved

c) The people present (i.e. key people)

d) The available time

e) The use of visual aids

f) Avoid use of jargon and technical language

g) Make presentation enjoyable and entertaining

h) Involve audience (i.e. ask for comments)

i) Put weighty focus on results and recommendations (because this

is what concerns the senior executives most).

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THE PRODUCT

NEW PRODUCT DEVELOPMENT STRATEGY

- A new product can be defined as anything that can be offered to

a market for attention, acquisition, use or consumption and that

might satisfy a want or need.

- The definition of a new product encompasses; original products,

product improvement, product modifications and new brands

that the firm develops through its own research and

development efforts.

- The new product development process takes the following eight

steps:

1. Idea generation

2. Idea Screening

3. Concept development and testing

4. Marketing strategy development

5. Business analysis

6. Product development

7. Test marketing

8. Commercialization

1. Idea Generation

- A company has to brainstorm and generate many ideas in

order to find a few good ones. There are two main sources

of new product ideas i.e. internal sources and external

sources.

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- Internal sources include a company top management,

manufacturing staff, the sales people and the research and

development departments.

- External sources include customers, competitors,

distributors, suppliers etc.

2. Idea Screening

- Involves filtering new product ideas in order to spot good

ideas and drop poor ones as soon as possible. Ideas are

subjected to selection criteria that include affordability,

acceptability, and reversibility.

3. Concept Development and Testing

- An attractive idea must be developed into a product

concept. A product concept is a detailed version of the

new product idea stated in meaningful consumer terms i.e.

presenting the consumer with descriptions and drawings to

get their reactions.

- Concept testing involves testing new product ideas with

groups of target consumers e.g. using questionnaire to ask

customers of their opinion of a new product.

4. Marketing Strategy Development

- Involves designing an initial marketing strategy for a new

product based on the product concept.

- The marketing strategy statement consist of three parts:

(a)Target market, market segment, the product

positioning

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(b)Market mix i.e. product, pricing, distribution and

promotion.

(c) Projecting possible viability of the product.

5. Business Analysis

- Business analysis involves a review of the sales, costs and

profit projections for a new product to find out whether

they satisfy the company’s objectives.

- If they do, the product moves to the product development

stage.

- To estimate sales, the company might study the sales

history of similar products and conduct surveys of market

opinion.

6. Product Development

- Involves the development of the product concept into a

physical product in order to ensure that the product idea

can be turned into a workable product.

- At this stage, the research and development department

develops a sample or prototype of the product.

Development of a successful prototype may go into weeks,

months or years.

7. Test Marketing

- This is a stage in which the product and marketing

program are tested in a more realistic market setting.

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- At this stage the company tests the entire marketing

program i.e. positioning strategy, advertising, distribution,

pricing, branding and packaging. Three approaches to test

market:

(a) Standard test markets – Is where a company selects a city

or town, conducts a full marketing campaign in this town

and uses shop audits, consumer and distribution surveys to

gauge product performance. The results are used to

forecast national sales and profits discover problems and

fine tune the marketing programme.

(b) Controlled Test markets – A group of customers are

selected, they are directed to participating shops. Within

the shops the company researchers have control factors

such as shelf placement, price packaging and promotions

for the product being tested. Behaviourscan is used to

track the consumer behaviour for new products from a

television set to a checkout counter. Detailed scanner

information on each consumer purchases is fed into a

central computer where it is combined with the consumer

demographic and TV viewing information, and analysis

done and conclusions drawn based on a daily or weekly

report.

(c) Simulated test markets – The Company shows

advertisements and promotions for a variety of products,

including the new product being tested to a sample of

consumers. It then gives the consumers a small amount of

money and invites them to a real or laboratory store where

they are allowed to buy anything using the money. The

researchers note how many consumers will buy the new

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product or competing brands. The researcher then asks the

consumers the reason for purchase or non purchase. Some

weeks later, they interview the consumers by phone to

determine product attitude, usage, satisfaction and

repurchase intentions.

8. Commercialization

- Test marketing gives management the information needed

to make a final decision about whether to launch the new

product or not.

- If the company decides to go ahead then it commercializes

the product. Commercialization is the introduction of a

new product into the market.

- The company launching a new product must first decide

on:

(i) Introduction timing – Depending on economic trends.

(ii) Where to launch the product – In a single location,

region, the whole nation or internationally. act

PRODUCT LIFE CYCLE

Management of every organisation knows that each product has a life

cycle that starts at conception of product idea and ends at the death of

a product. The company therefore aims at maximizing its profits before

the products useful life ends.

Assumptions of the PLC

i) A product has a limited life

ii) Product sales pass through distinct stages each posing

different challenges to the seller

iii) Product profit rise and fall at different stages

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Product Development stage

Introduction Growth Maturity Decline

Time

Profits curve

Innovators Middle majority

Early Laggards

iv) Each stage requires different financial, marketing,

manufacturing, purchasing and personnel strategies.

Stages in the Life Cycle

1. Product development CONCEPTION

2. Introduction BORN

3. Growth GROWTH

4. Maturity MATURITY

5. Decline DEATH

Profits & Losses

PLC curve

The diagram above shows the sales and profits over the products life

from inception to demise.

NB: The PLC shape presented above is a general shape but different

products will have different shapes.

MARKETING STRATEGIES AT THE VARIOUS STAGES OF THE PLC

1. INTRODUCTION STAGE

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Product development begins when the company finds and develops a

new product idea. During product development sales are zero and the

company’s investment costs mount. The introduction stage starts

when the new product is first launched.

In this stage, profits are negative or low because of low sales and high

distribution and promotional expenses.

A company that is pioneering a market must choose a launch strategy

that is consistent with the intended production positioning.

Firms therefore focus their selling to those buyers who are most ready

to buy and not on maximizing profits. These groups of first time

buyers are also called innovators.

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Strategies at the Introductory StageThere are four possible strategies at this stage and these are displayed

in the table below.

PROMOTION

(i) Rapid Skimming

An organisation can decide to employ rapid skimming if;

Large Part of the market is unaware of the product Market willing to buy at high price Competition is present Market is large

For Example Safaricom mobile phone service provider

(ii) Slow Skimming

An organisation may decide to employ slow skimming if;

Market is relatively limited in size Large part of the market is unaware of the product Market is willing to pay high prices A little threat in competition

(iii) Rapid Penetration

An organisation may decide to employ rapid penetration if; Market is large in size Market is relatively unaware of the product Market is price sensitive Potential competition exists For Example EABL and Alvaro(iv) Slow Penetration

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SLOW PENETRATION

Low Profile Strategy

RAPID PENETRATION

Pre-emptive Penetration Strategy

RAPID SKIMMING

High Profile Strategy

PRICE

SLOW SKIMMING

Selective Penetration Strategy

HIGH LOW

HIGH

LOW

An organisation may decide to employ slow penetration if;

Market is large Market is aware of the product Market is price sensitive Established competitors exist

For Example entry of Orange mobile phone service providers into Kenya

2. GROWTH STAGE

- In the growth stage, sales climb quickly. The early adopters start

to buy the product especially after hearing favourable word of

mouth about the product.

- The increasing profits soon attract new competitors who join the

market in the hope of gaining from this opportunity.

- The increase in competitors leads to an increase in the number

of distribution outlets and sales jump up.

- Educating the market remains key to marketers, while keeping

watch of competition.

- Profits increase as promotions are spread, while per unit cost

falls as indicated by the first growing profit curves.

Strategies here include:

i) The company improves product quality and adds new

product features to beat competition.

ii) The company opens new distribution channels.

iii) It shifts advertising from building product awareness to

building product conviction and loyalty.

iv) Prices may be lowered to attract new buyers or as a means

of creating competitive advantage.

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- A sustained effort on product improvement, promotion and

distribution may lead the company to capturing a dominant

position.

3. MATURITY STAGE

- This is the stage in the PLC in which sales growth slows or levels

off. This stage usually lasts longer than the growth stage.

- Most products die at this stage, because competition is greatest

at this point. It is divided into three:

a) Growth Maturity: This is the point where the growth rate

starts to decline

though some laggard buyers continue to come

in.

b) Stable Maturity: A stage where sales level off because the

market is

saturated.

c) Decaying Maturity: A stage where there is absolute decline

of sales because customers are seeking substitute products.

Competitors begin reducing prices, increase their advertising

and sales promotion and increase their research and

development budgets to find better versions of the product.

This eventually leads to a drop in profits.

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Strategies here include:

i) In modifying the market,

The company tries to increase the consumption of the

current segments. It also looks for ways of increasing

usage among present customers. The company can also

move into a new market segment.

ii) In modifying the product, quality, features, styles and

designs are upgraded to inspire more consumers to use it.

Alternatively, the company might add new features that

expand the products usefulness, safety or convenience.

iii) In modifying the promotional strategy, the company’s

objective will be to improve sales. It can cut prices to

attract new users and lure competitor’s customers. It can

launch a better advertising campaign or use aggressive

sales promotions, trade deals, price offs and contests.

iv) In terms of pricing, the company can maintain current

prices as long as they are competitive. The company might

reduce prices if doing so gives them a competitive

advantage.

4. DECLINE STAGE

- This is the PLC stage in which a products sales decline. Sales

may plunge to zero or they may drop to low levels where they

continue for many years.

- As sales decline, many competitors exit the market, drop smaller

market segments or cut off promotional budgets and reduce

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their prices further.

- A weak product can be costly to maintain. It takes a lot of

management time, it requires advertising and sales force

attention.

- Management therefore needs to identify the aging products and

decide whether to maintain, harvest or drop each of them.

Strategies here include:

i) Management may decide to maintain the product in the hope that

competitors will exit the industry, leaving the company with an

advantage.

ii) Harvest the declining product - which means reducing various

costs (e.g advertising sales force, research and development etc.)

and hope that sales hold up. If successful, harvesting increases the

company’s profits in the short run.

iii) Management may decide to drop the product. It can sell it to

another firm or simply liquidate it at salvage value.

iv) Management may decide to divest. Divesting strategies enables

management to do away with a product whose performance is

below expectation. Two approaches can be used;

a) Concentric diversification - Diversification is the creation of

products similar to the one existing or creating products

completely different from existing ones but which may appeal

to existing and new customers e.g. Coca cola deciding to

produce and sell Dasani water

b) Conglomerate diversification - Conglomerate diversification is

the involvement in production of products or provision of

services that are not related with the current products and

services e.g. EABL deciding to produce Alvaro.

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PRODUCT DECISIONS

A product is anything that can be offered to satisfy human needs.

Products are broadly divided into two depending on consumers who

use them:

(a) Consumer products

(b) Industrial products

(a) Consumer Products

- Are products bought by final consumers for personal use.

- Based on how consumers buy them, consumer products

are further classified as follows:

(i) Convenience products – are consumer products and

services that consumers buy frequently, immediately and

with little or no comparison and buying effort e.g. salt,

bread, soap etc.

(ii) Shopping products – are less frequently purchased

consumer products that customers compare carefully on

suitability, quality, price and style e.g. furniture, cars,

cooker, fridge.

(iii) Specialty products – Are consumer products and services

with unique characteristics or brand identification for which

a significant group of buyers is willing to make a special

purchase effort e.g. photographic equipment, designer

clothes, specific brands of cars (Hummer, Lexus).

(iv) Unsought products – Are consumer products that the

consumer either does not know about or knows about but

does not think of buying e.g. cemetery plots, life insurance.

(b) Industrial Products

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- Are those purchased for further processing or for use in

conducting a business.

- There are three groups of industrial products i.e.

(i) Materials and parts – Include raw materials and

manufactured materials and parts e.g wheat, cotton, crude

petroleum, iron ore, rubber, cement price and service are

the major marketing factors.

(ii) Capital items – Are industrial products that aide the buyer’s

production activities e.g factories, offices, generators,

forklift trucks etc.

(iii) Supplies and services – Supplies include stationery,

lubricants, brooms etc. They are purchased with little

effort.

PRODUCT DECISIONS

Marketers indulge in a number of product decisions the many of which

include

A. Product Attributes

Product attributes include quality, features and design.

Marketers make decisions about product attributes as follows:

1. Product quality – Refers to the ability of a product to

perform its functions as expected by the consumer or to

satisfy consumer needs.

2. Product features – Features are the external appearances

of a product that distinguishes it from other similar

products. Companies often conduct consumer surveys to

understand what consumers want and design features that

meet consumer needs. Common Products features include;

Packaging, Colour, Options, Sizes, Image amongst others.

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3. Product style and design – Style describes the appearance

of a product. A good design is that which contributes to

products usefulness as well as to its looks.

B. Product Line

- A product line is a group of products that are closely

related because they function in a similar manner, are sold

to the same customer groups, are marketed through the

same outlets or fall within a given price range.

Example of product lines:

(a) Toyota: Toyota Corolla :EE 90,100,110,120

Toyota Rav: Rav 4, Rav J

(b) EABL: Tusker, Guinness, Smirnoff, Alvaro

(c) Coca-cola; Fanta, Coke, Sprite, Bitter Lemon

- The major product line decisions include:

1. Product line length – Refers to the number of items in a

product line. The line is too short if the manager can

increase profits by adding items. The line is too long if the

manager can increase profits by dropping items e.g. by

adding Alvaro to their products EABL lengthened their line

2. Product line filling – Involves adding more items within the

present range of the line. This can be done for any of the

following reasons, to increase profits, satisfy dealers, or to

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utilize excess capacity e.g. Fanta orange, Fanta black

current and Fanta citrus.

3. Product line stretching – Occurs when a company

lengthens its product line beyond its current range. The

company can stretch downward (to penetrate a new

market currently held by competitors) or it may stretch

upward to add prestige to their current products e.g

Barclays Prestige Account.

C. Product Mix Decisions

A product mix (or product assortment) is the set of all product lines

and items that a particular seller offers for sale for example EABL

produces a product mix made up of Tusker, White Cup, Guinness,

Alvaro, Smirnoff amongst others. Toyota product mix include Toyota

Corolla, Toyota Caldina, Toyota Nadina. Toyota Prado, Toyota RAV 4,

Toyota Camry etc.

A product mix has four important decisions, product mix width, product

mix length, product mix depth and product mix consistency.

NB: 1. The product line decisions discussed above applies to the

product mix

2. The fewer the number of lines and product mixes, the better

for each company.

D) PRODUCT BRANDING

A brand is a name, term, sign, symbol or design that identifies the

maker or seller of a product or service and differentiates it from the

competitor’s products.

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Description of Brands

Brand name: Utter able or verbalized part of the brand i.e. Toyota, Kimbo, Imperial, Fanta, Safari Boot, Nike, Firestone.

Brand mark: Part of the brand that can only be recognized i.e. Merc Symbol,

Barclay eagle etc.

Trademark: Part of the brand given a legal protection. Trademark® is an exclusive right to use a brand or part of a brand

Copyright:This is the exclusive right to reproduce, publish and sell.

Brand equity: Monetary value of a brand. High brand loyalty builds higher brand

Equity: Coca Cola has brand equity of US$ 36 billion

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Significance of Branding to Consumers

(i) Identify the products they need faster.

(ii) Brands tell consumers something about quality. Customers of a

particular brand expect the same features, benefits and quality

each time they buy.

(iii) It enhances a sale of a new product(iv) It also enables profitable pricing from time to time

Significance of Branding to Sellers

(i) The brand name provides a basis of selling special qualities.

(ii) Legal protection of brands from copying by competition

(iii) Helps sellers segment markets e.g Toyota Lexus for the

actualizes, Toyota Prado for the achievers, Toyota Corolla for the

strivers.

Characteristics of a “good” brand name

(i) Easy to pronounce, recognise and to remember

(ii) Short

(iii) Distinctive, unique

(iv) Describes the product and product use

(v) Describes product benefits

(vi) Has a positive connotation

(vii) Reinforces the product image

(viii) Legally protectable locally and internationally

E) PRODUCT PACKAGING

- Packaging is the activity of designing and producing the

container or wrapper for a product. Traditionally, the primary

function of the package was to contain and protect the product.

Today packaging performs numerous functions including

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attracting, attention, describing the products and making the

sale.

- A good package is one which is in line with the packaging

concept (should offer protection, introduce a new dispensing

method, or suggest product qualities. A good package further

addresses issues such as size, shape, materials, colour, text and

brand mark.

There are Three Levels of Packaging

1. Primary package - This is the product’s immediate container i.e. the

tube containing the after shave or tooth paste.

2. Secondary package - This is the material that covers or protects the

primary package and is discarded when the product is just about to

be used.

3. The shipping package - This is the packaging necessary for storage,

identification and transportation.

PRODUCT LABELING

- Labels may range from simple tags attached to product to

complex graphics that are part of the package.

- Labeling performs the following functions:

(i) Identifies the product or brand

(ii) States the price

(iii) Promotes the product – Attractive graphics

(iv) Describes the product – Manufacturer, where made, when made,

content, direction of use, safety etc.

PRODUCT WARRANTIES

Product warranty protect the buyer and gives essential product information

Expressed warrantees are written guarantees Implied Warranty is an unwritten guarantee that an item is fit for its

purpose

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UNIVERSAL PRODUCT CODES

Abbreviated as UPCs and was introduced in 1974 They are numeral codes appearing as thick and thin vertical lines They are used in high volume outlets and supermarkets to ease

identification of goods Lines are computerised to match codes with brand name, size and

price

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PRICING PRODUCTS AND PRICING DECISIONS

Price is the amount of money charged for a product or service by the

seller. Price is the only element of the marketing mix that produces

revenue, all the other elements are cost factors.

Throughout most history, prices were set by negotiation between

buyers and sellers. This is also called dynamic pricing – charging

different prices to different customers. Today most prices are fixed

prices i.e. one price is set for all buyers.

Price goes by many names a few of which include:

a) Rent for apartmentb) Fees for tuitionc) Fare for taxid) Rates for utilitiese) Interest for money borrowedf) Toll for use of drivewayg) Salaries for white collar jobsh) Wages for blue collar jobsi) Commission for sales persons services

PRICING STRATEGIES

The price strategies often change as a product passes through different stages in the PLC. For new products, companies normally face an uphill task while coming up with the price for the first time. Two of the commonly adopted strategies include:

i) Market skimming strategiesii) Market penetration strategies

Market Skimming Strategies

Market skimming pricing is the setting of a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay a high price. The company gets few customers but more profitable

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sales. An example companies that practice market skimming strategies are: Nokia and Sony.

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Market skimming strategies are workable only if the following conditions hold:

i) The product quality and image must support its higher price.ii) Enough buyers must want the product at that price.iii) The cost of producing the few units must not exceed the target

revenue iv) Competitors should not be able to enter the market easily and

undercut the high price

Market Penetration Strategies

Market penetration pricing is the setting of a low price for a new

product in order to attract a large number of buyers and a large

market share. Example of firms that have ever practiced market

penetration include Coca-Cola and Dell.

The low price is geared at penetrating the market quickly and deeply.

The high sales volume results in falling costs allowing the company to

cut its price even further.

Several conditions must be met for this strategy to work including the

following:

i) The market must be highly price sensitive so that a low price

generates more market growth

ii) The production and distribution costs must fall as sales volume

increases

iii) The low price must help keep away competition.

Six Step Procedure for Price Setting

1) Selecting price objective

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2) Determining demand3) Estimating costs4) Analyzing competitors price5) Selecting price method6) Selecting the final price

FACTORS TO CONSIDER WHEN SETTING PRICES

There are two factors to consider in pricing:

(i) Internal factors

(ii) External factors

INTERNAL FACTORS

Internal factors include company’s marketing objectives, marketing

mix strategy, costs and organizational consideration.

1. Marketing Objectives

The company’s marketing goal could be survival, current profit

maximization (Maximize market skimming), market share

leadership, or product quality leadership.

Companies set survival as their objective if they are troubled by

too heavy competition, and changing consumer needs to keep a

plant going in this case, the company sets low prices hoping to

increase demand.

A company with current profit maximization as is objective, will

choose a high price that maximizes current profits, cash flow or

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return on investment. It uses skimming strategies in every new

market segment that it opens up.

To obtain market share leadership, firms set prices as low as

possible e.g Coca-Cola. Such firms employ rapid penetration

strategies to optimize on there representation in the market.

To attain product quality leadership, a firm charges high prices to

cover the high performance quality and high cost of research and

development. The firm differentiates its product clearly

exemplifying the unique qualities of their product. They position

their products as superior products relative to competition e.g.

Safari Park Hotel

2. Marketing Mix Strategy

Companies often position their products on price and then tailor

other marketing mix decisions to the prices they want to charge.

There are five product mix pricing situations including:

a) Product Line Pricing - Is the setting of price steps

between various product lines. The basis of product line

pricing could be the difference in cost, customer evaluation

of different features and competitors prices e.g. EABL sets

the price of Alvaro as different from price of Guinness and

Pilsner based on consumer evaluation.

b) Optional Product Pricing – Many companies offer to sell

optional or accessory products along with their main

product. They therefore price the optional products with

the main product. e.g. a motor vehicle seller might offer to

sell the car with alloy rims and CD changer as optional

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products. The seller set optional prices for the rims and CD

changer

c) Captive Product Pricing – Companies may decide to

make a separate product that must be used along with the

main product e.g. razor blade and cartridge, printer and

cartridge film and camera etc. HP for instance is said to

make very low margins with its printers but very high

margins with its cartridges.

d) By Product Pricing - Is the setting of a price for by

products in order to make the main product’s price more

competitive. For example by producing meat, petroleum

and agricultural products, there are often by products.

Using by product pricing the manufacturer will seek a

market for these by products and should accept any price

that covers more than the cost of storing and delivering

them.

e) Product Bundle Pricing – Is the combination of several

products into a bundle and offering them at a reduced

price e.g. fast food restaurants may bundle chips, chicken

and Soda at one reduced price.

3. Costs

Companies always want to charge a price that covers all costs of

producing, distributing, selling and delivering the product at a

fair rate of return. The following types of costs must be

remembered:

(a) Fixed cost (overheads) – are costs that do not change

with production or sales levels e.g. rent, interest,

salaries etc.

(b) Variable cost – are costs that vary directly with the

level of production e.g. wages, raw materials cost

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etc.

(c) Total cost - Is the sum of the fixed cost and the

variable costs

Marketers make considerations for all the costs (total costs) of

making a product after which a mark up could be used to arrive

at the final selling price. Costs must be minimized for a firm to be

competitive in its pricing.

4. Organizational Consideration

- Management must decide who sets the price in the

company.

- In smaller companies, top management sets the price

rather than marketing and sales departments.

- In larger companies, prices are set by product or brand

managers and approved by top management.

- In industrial markets, sales people are allowed to negotiate

with customers within certain price range. Even so,

management sets the pricing objectives and policies.

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EXTERNAL FACTORS

These are factors often out of control of the company and may include;

Estimated demand, type of competitive markets and other

environmental elements.

1. Estimated Demand

Demand is the quantity of commodity that consumers are willing and

able to buy at a given price over a given time period.

Price elasticity of demand refers to how responsive demand is to a

change in price. Some products are price elastic others are price

inelastic.

In markets with elastic demand the marketer must be aware that a

slight increase in price is followed by a big drop in quantity demanded.

While in markets with inelastic demand, the marketer charges high

prices to optimize profitability.

2. Type of Market

Sellers pricing freedom varies with the type of markets as follows:

(a) Pure competition – under this structure, the price is given

by the market forces of demand and supply and sellers

take it as the market decides. Marketers efforts of sales

promotion, prices change and advertising play no role in

influencing demand, they only create awareness.

(b) Monopolist – The firm in this market is the largest single

seller. The firm sets the price and is in full control of its

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demand curve. It can set a high price to maximize profits

or set a low price to maximize on sales revenue.

(c) Monopolistic competition – The firms in this market are the

price setters; however each firm is keen to watch the

competitors prices and set theirs as close as possible to

that of competitors. Aggressive marketing campaigns i.e.

advertising and strong branding reduces the impact of any

price difference between firms.

(d) Oligopolistic competition – Each seller is free to set prices

on the similar but differentiated products. A price increase

by one firm is not necessarily followed by a rival firm.

3. Other External Factors

a) Competitors Costs, Prices and Offers

Firms must benchmark their products, costs and prices with

those of competitors in order to know if they are operating at a

cost advantage or disadvantage. A firm then decides what price

to offer to counter competition.

b) Economic Conditions

Economic trends such as recession and boom would affect the

price charged. Economic variables like interest rate would

equally impact on prices.

Pricing Approaches/Methods

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1. Cost based pricing – Adding a standard mark up to the cost of

the product to get the final selling price. Also called mark up

pricing.

Mark up pricing = Unit cost

(1-Desired % return on sales)

2. Perceived value pricing – Also called positioning above

competition. Price based on the perceived value of the product

by the customer and company. Mostly used in product

positioning e.g. for upper markets, marketers charge higher

prices and for low markets lower prices.

3. Competition based pricing – Also called positioning below

competition Setting prices based on the prices that competitors

charge for similar products.

4. Breakeven analysis pricing – Setting price to break-even on the

costs of marketing the product.

Break even point in units = Total fixed Cost

(Selling Price-Average variable cost)

5. Sealed bidding price: Based on customers proposals.

6. Target return pricing - This is a price that would help yield a

target return on Investment. Formulation for getting this is given

as

TRP = unit costs + Desired returns % capital

invested

Unit sales

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OTHER FACTORS CONSIDERED BEFORE ADOPTING A PRICE

There are a number of considerations to be made when charging

customers after determining the base price of a product.

1) Price discounting

i) Cash discount

ii) Quantity discount

iii) Functional discount/trade

iv) Seasonal discount

2) Promotional pricing

i) Loss leader pricing

ii) Cash rebates

iii) Low interest financing for purchase of products

3) Discriminatory pricing

i) Resident or non-resident

ii) Geographical location of customer

iii) Age or gender

iv) Time pricing i.e. day or night rate

v) Product image pricing

4) Psychological pricing strategy

i) Quality and brand value consideration

ii) Impact of price or other parties i.e. dealers and distributors, sales

people, suppliers

iii) Competitor’s price

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DISTRIBUTION CHANNELS

A marketing channel or distribution channel refers to the path followed

in the process of moving a product or service from the producer to the

final consumer or to business users.

Major Distribution Channels

There are four major channels of distributions as shown below:

Channel 1 is also called a direct marketing channel as no intermediary

levels are involved. The company sells directly to consumers’ e.g

Safaricom, Celtel, Bata Shoes, etc.

The remaining channels 2, 3, 4 are indirect marketing channels

containing one or more intermediaries. A company may choose one

channel of distribution or use a combination of distribution channels

e.g Unilever, EABL, Coca-Cola etc.

A channel level is a layer of intermediaries that performs some work in

bringing the product and its ownership closer to the final buyer.

Examples of Intermediaries

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Channel 1

Channel 2

Channel 3

Channel 4

Producer

Producer

Producer

Producer Distributor/Agent

Wholesaler

Wholesaler Retailer

Retailer

Retailer

Final Consumer

Final Consumer

Final Consumer

Final Consumer

a) Merchant Middlemen - These include Retailers and Wholesalers

b) Agent Middlemen - These include Brokers, Company

Representatives, and sales agents.

c) Facilitators - These include Banks, Advertising agencies,

Distributors, Transport Companies, and Independent

warehouses.

Retailers

These are merchants who sell goods and services directly to

consumers for personal

or non business use. There are two types of retailers

a) Stores Retailers: Like Boutiques, Fast Foods, Discount Stores etc

b) Non Store Retailers: Like Direct Marketing and selling by

producer, Automatic vending, Buying services (Arranging special

purchase arrangement for individuals in companies or specific

location.

Wholesalers

These are merchants who sell goods and services to customers who

buy for resale or

for business use.

Types of Wholesalers

Wholesalers can be classified into four broad categories.

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1. Brokers and Agents - Those who do not take title of the goods

and perform only a few functions.

2. Manufacturers’ and Retailers’ branches and Offices - These

are large branches and company offices set up to facilitate good

inventory control

3. Merchant Wholesalers - These are independently owned

businesses that take title of the goods. There are two types:

a) Full Service Wholesalers - These are wholesalers and Distributors

for Industrial products who sell primarily to retailers or

manufacturers respectively. They provide full range of retail

services

b) Limited Service Wholesalers - These provide only a few services

to their suppliers and customers e.g. Truck Wholesalers, Cash

and Carry wholesalers, and Mail Order wholesalers.

4. Miscellaneous Wholesalers - These are found in the specialised

sectors of the economy like Agricultural assemblers, Petroleum Bulk

plant and terminals

IMPORTANCE OF CHANNEL MEMBERS

The members of a marketing channel perform many key functions

including:

1. Information – They gather and distribute marketing research and

intelligence information about actors and forces in the marketing

environment needed for planning and decision making.

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2. Promotion – They develop and spread persuasive communication

about an offer i.e. by hanging posters on their vehicles, business

premises of price cuts, volume discounts, branding view with the

product etc.

3. Contact establishment – They find and communicate face to face

with the prospective buyer.

4. Physical distribution – They transport and store goods on behalf

of manufacturers.

5. Financing – They acquire and use funds to cover the costs of

channel work.

6. Risk taking – They cover risks associated with distribution e.g

pilferage of goods in storage, theft of goods on transit, lose of

goods resulting from accidents on transit etc.

7. Negotiation – They discuss price reductions on behalf of the

manufacturer with final buyers to make a sale.

Note: Today many companies outsource the distribution function to

other firms and concentrate in their key function of production.

CHANNEL DESIGN DECISIONS

For a company to be effective in its distribution effort, channel analysis

and decision making must be purposeful. The following decisions must

be considered when designing a channel:

1. Analysis of consumer needs

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2. Channel objectives

3. Channel alternatives

4. Evaluation of channel alternatives.

1. Analysing consumer needs

Designing the market channel starts with finding out what target

consumers want from the channel e.g do consumers want to buy

from nearby locations or are they willing to travel more distance,

do consumers want to buy in person or over the phone, through

mail or internet? Do they want add-on services (delivery, credit,

repairs, installation etc).

Providing the fastest delivery, a wide assortment, and all add-on

services may not be possible because the channel members may

not have the resources or skills needed. The company must

therefore balance between consumer needs and the costs of

meeting these needs. Consumers will often accept lower service

levels in exchange for lower prices.

2. Channel objectives

The company should decide which market segments to serve

and the best channels to use in each case.

The company’s channel objectives are also influenced by the

nature of the

company, its products, its competitors, and the environment.

3. Major channel alternatives

A firm must identify the types of channel members available to

carry out its channel work in terms of types of intermediaries,

number of intermediaries and responsibility of each.

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There are three major types of intermediaries:

(i) Company sales-force – The company can use its

sales force to target the final consumer by enlarging

the sales-force and involving them in direct

marketing.

(ii) Manufacturer’s agency – A manufacturer can hire

agents or independent firms to sale its products.

(iii) Industrial distributors – Find distributors in different

market segment/regions.

In terms of the number of marketing intermediaries, a company

can decide between:

(i) Intensive distribution – Stocking the product in as

many outlets as possible.

(ii) Exclusive distribution – Giving a limited number of

dealers the exclusive right to distribute the

company’s products in a given territory.

(iii) Selective distribution – The use of more than one but

few intermediaries to stock company products.

In terms of responsibility, producers and intermediaries should

agree on price policies, condition of sale, territorial rights and

specific service to be performed by each party.

4. Evaluating the Major Alternatives

After identifying the channels, the company must evaluate them

against economic, control and adaptive criteria.

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Using economic criteria, a company compares the likely sales,

costs and profitability of each alternative.

Control issues means giving some control of the marketing of a

product to the intermediary. The company must retain as much

control as possible.

Channels often involve long-term commitment; hence companies

must consider the ability of a channel to adapt to environmental

changes.

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PRODUCT PROMOTION

After companies have developed a product, they must inform the customers and prospects about the product. The process of passing on product information to product users is referred to as product promotion.

Designing and Managing an Integrated Marketing Communication

Integrated Marketing Communication refers to the various ways in which a firm communicates a marketing idea to induce influence on the target market and develop effective demand to their benefit and the benefits of the organisation. IMC is the basic engine for driving PROMOTION as a tool of the marketing mix.

Basic Purpose Promotion

1) To inform2) To persuade3) To remind4) To induce inquiry

Steps in Developing effective integrated marketing communication (IMC)

1) Identify the target audience2) Determine the communication objectives3) Design communication item4) Select communication channel5) Establish communication budget6) Decide on the communication media mix7) Measure communication results8) Manage integrated IMC

KEY PROMOTIONAL STRATEGIES

1. Advertising2. Sales promotion3. Events and Experiences

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4. Public relations5. Direct marketing6. Personal selling

1. ADVERTISINGAdvertising is any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor.

General Objectives of Advertising1) To announce product existence2) Highlight specific feature: Unique Selling Proposals (USP)3) Develop favorable corporate or brand image4) Remind and enforce brand loyalty5) Encourage greater use6) Encourage no users to use the product7) Correct any false information8) Demonstrate how the product works9) Provide a reassurance that a customer has made a good decision

Media and Methods of Advertising1) Television2) Newspaper3) Magazines and Trade

Journals4) Commercial Radios5) Transport Media6) Cinema /Motion pictures7) Packaging

8) Brochures and booklets9) Posters and leaflets10) Directories11) Billboards12) Internet13) Display signs14) Point of purchase displays

ADVERTISING DECISIONS

Markets must consider four important decisions when developing an advertising program: setting advertising objectives, setting advertising budgets, developing advertising strategies and evaluating advertising campaigns.

1. Advertising objectives- The main advertising objectives are:

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(a) Information advertising – Tells the market about a new product, suggests new uses for a product or informs the market about a price change e.g Jik, Omo, Alvaro etc.

(b) Persuasive advertising – Involves building brand preference by persuading consumers to always buy your brand or to switch to your brand e.g super loaf adverts, Nissan shift expectation ad.

(c) Reminder advertising- Involves reminding consumers that they will need the

product in the near future especially during off seasons.

- Also involves keeping consumers thinking about the product e.g Coca-Cola adverts.

2. Setting Advertising Budget- A brands advertising budget often depends on its stage in

the product life cycle.- A new product typically needs large advertising budgets to

build awareness and persuade consumers to try it.- A mature product needs lower budgets of advertising as a

ratio to sales.- Also brands in a market with many competitors require

aggressive advertising e.g. beer, soft drinks, pharmaceuticals, insurance etc.

3. Developing Advertising Strategy- There are two factors to consider in developing advertising

strategy i.e. creating advertising message and selecting advertising media.

- The advertising message must be appealing, believable and distinctive for consumers to think about it or react to the product. Advertisers take several approaches when developing their messages. The more common appeals are: testimonials (messages which are presented and endorsed by someone who is seen as an expert, trustworthy and believable to consumers), humorous advertising (with jokes about the product), sex appeal (Use of sexuality to appeal to a certain gender that

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constitutes a target market) and slice of life advertising (portraying the consumer in a realistic situation)

- A good advertising media is one that reaches more consumers, exposes the product, the target market frequently, impacts the qualitative values of a message on the consumer. Major media types include newspapers, T.V, Radio, direct mail, magazines, bill boards and internet.

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4. Evaluating Advertising- Advertisements effectiveness can be evaluated by copy

testing or sales effects.- Copy testing can be done before or after an advert is

printed or broadcast. Before an advert is placed, the advertiser can show it to consumers, ask them how they like it and measure recall or attitude changes resulting from it. The same can be done after an advert is run.

- One way of measuring sales effects is to compare past sales before an advert was placed to sales level after an advert is placed.

- Other methods of measuring the effectiveness of an advert include:1) Measure awareness and impact using recall/recognition

test2) Measure increase in revenue 3) Maintenance and improvement in market share4) Use marketing research to measure attitude change 5) Measure profit overtime6) Measure number of inquiries.

2. SALES PROMOTION

- Sales promotion is short term incentives to encourage the purchase or sale of a product or service.

- The marketer must set sales promotion objectives before deciding on the sales promotion tool to use.

General Objectives of Sales Promotion

1) Facilitates customer trials: Free samples2) Cements a long term relationship with middlemen3) To attract brand switchers: low prices4) To encourage sales force and middlemen to support a new

product5) To attract users to buy more

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SALES PROMOTION DECISIONS

The primary concerns of marketers when making sales promotion decisions include choosing the target market objective and choosing a sales promotion tool.

1. Target Market Objective

(i) Consumer promotions – Used to increase short term sales or help build long-term market share.

(ii) Trade promotions – Includes getting retailers to carry new items and more inventories, getting them to advertise the product and to give it more shelf space.

(iii) Sales force or business promotions – Are used to generate business leads, stimulate purchases, reward customers, and motivate salespeople.

2. Sales Promotion Tools

Depending on the sales promotion objective decided and the target market, the following tools can be used:

(i) Consumer promotion tools(a) Samples – A small amount of product offered to

consumers for trial.(b) Coupons – Certificate that gives buyers a saving

when they purchase a specified product.(c) Cash refunds – Offer to refund part of the purchase

price of a product to consumers who send a proof of purchase to the manufacturer.

(d) Price pack – Reduced price that is marked by (cents offs) the producer directly on the label or package.

(e) Premium – Are goods offered either free or at a low price as an incentive to buy a product e.g Colgate and toothbrush.

(f) Advertising specialties – Are useful articles imprinted with an advertiser’s name that are given as gifts to consumers e.g pens, calendars, key holders, shopping bags, T-shirts, caps, nail files, umbrella, tea mugs etc.

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(g) Patronage rewards – Cash or other award for the regular use of a certain company’s products or service.

(h) Point of purchase (POP) promotions – Include display and demonstrations that take place at the point of purchase or sale.

(i) Contests, sweepstakes and games, giving consumers a chance to win something e.g cash, trips, goods by luck.

(ii) Trade promotion tools

The consumer promotion tools identified above can also be used as trade promotions.

In addition, the manufacturer may offer:

(a) Discount off the list price. This is also called price off, off invoice or off list. A straight discount is a straight reduction in price on purchase during a stated period of time.

(b) An allowance. This is promotional money paid by manufacturers to retailers in return for agreeing to feature the manufacturer’s products in some way e.g an advertising allowance compensates retailers for advertising the product, a display allowance compensates them for using special displays.

(c) Conventions and trade shows – Organised by manufacturer to promote their products. Are often costly undertakings.

(iii) Sales Force ToolA sales contest – Organised for salespeople or dealers to motivate them t increase their sales performance over a given period. The winner gets a prize.

3. EVENTS AND EXPERIENCES

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Company sponsored activities and programmes designed to create daily brand related interactions including the following:

Sports Entertainment Festivals Factory tours

Company Museums Street activities Road shows

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4. PUBLIC RELATIONS

Public relations means building good relations with the company’s

various publics.

Publicity - This is the total effort by an organisation to create,

improve and maintain a favourable image of the company and its

publics. It is popularised as Public Relations, and the title for this role

and responsibility within the organisation may the Public Relations

Manager or Publicity Manager.

Public relations department perform the following functions:

1) Press relations – Creating and placing newsworthy information in

the news media to attract attention to a person, product or device.

2) Product publicity – Publicising specific products.

3) Public affairs – Getting involved in corporate social responsibility e.g

building schools, roads, and social amenities to a local community.

4) Investor relations – Maintaining relationships with shareholders and

others in the financial community.

5) Lobbying – Building and maintaining relations with members of

parliament and government officials to influence legislations and

regulations in favour of an organisation or industry.

Major Public Relations Tools

1) News – PR professional create favourable news about the company and its products.

2) Speeches – Company executives field questions from the media or the MD’s charismatic talk before a large audience

3) Special events – Include conferences, press tours, grand openings of branches, organizing marathons etc.

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4) Corporate identity materials – e.g. logos, stationery brochures, signs, business cards, buildings, uniforms, T-shirts, company cars and trucks.

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DIRECT MARKETING

The use of mail, telephone, fax, email or internet to communicate directly with or solicit response or dialogue from specific customers or prospects.

Other tools used in direct marketing include: Catalogues Telemarketing Electronic shopping

TV shopping Fax mail Voice mail

PERSONAL SELLING

Personal selling is the face to face interaction between a company’s salesperson and a customer or prospect. Personal selling optimizes the buyer seller dyad often resulting in an actual purchase of the product.

Functions and Roles Information gathering regarding sales needs Identifying sales leads Prospecting: finding and cultivating new customers Communicating: Illustrating product and service idea Selling: salesmanship Servicing: Technical after sales service

Personal selling is about looking for potential buyers (prospecting), presenting the product and getting an order from the customer. It is therefore the climax of the entire marketing effort. A good salesperson is one who closes a sale successfully.

THE END

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