MARKETING

Introduction:

Marketing is the theory and practice of presenting, advertising and selling of goods.

Marketing actually means and covers everything from company culture and positioning

through market research new business/ product development, advertising and promotion,

PR (Public/press relations), and arguably all of the sales functions as well. Marketing is

the process by which a business decides what to sell to whom, when and how and then

does it.

The marketing process including domestic and global market assessment, strategic

marketing planning, and the development of an effective marketing mix (product, price,

promotion, and distribution) to create customer value. The marketing concepts such as

consumer/business, buying behavior, market research, brand management, product

development, and techniques for pricing, promotion and distribution are covered.

Market research involves the following steps:

1. Define the problem and set research objectives

2. Develop a plan to collect data from primary and secondary sources

3. Collect information through desk research or fieldwork,

4. Analyze the information to find averages, variable and various relationship of the

data

5. Present the main findings to management/ staff

Primary data consists of original information collected specifically for the purpose of

hand and is collected through fieldwork. Secondary data is information which already

exists somewhere, perhaps in another form, and was collected for another purpose. It is

identified and analyzed by desk research.

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Keys aspects of market research to identify potential markets:

1. Number of potential customers

2. Characteristics of potential customers

3. Target market

- Segmentation

- Primary and secondary customers

4. Product or service characteristics

- Price and quality levels

5. Competitors characteristics

- Analysis by price and quality

Market area, size and Trends:

This is the section of the market research in which you will define your market area,

determine the size of the market, and analyze the trends that are likely to affect the

market.

Market area:

Specify your market. In what geographical are is your market located? If you are a mail

order firm, your market may be spread out all over the country or even the world. If you

are a small copying centre, your market may be limited to the tenants of the office

building that you are located in.

Market size:

Once you have identified your market, determine the size of that market. The

determination should always be done in value and in unit sales. It is useful to have

several years of figures so that comparisons can be made. Is the market increasing,

decreasing or stable?

Market trends and outlook:

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While historical data in market is important, it is not correct to merely project from that

data into the future. Other factors may cause the market to change drastically. One way to

estimate the outlook for the future is to analyze trends that are occurring or are expected

to occur in the market. The analysis of these trends is important not only to determine

market size but also to determine how you can best operate in the market.

Knowing the trend tells you much about the expected size of your market but it also

poses questions that you will want to consider when deciding how to operate your

business.

Doing the research:

Your research may require primary or secondary sources, depending upon your market. If

your market is a large one, you may be able to find most or all of the information from

published sources. For small or specialized marcets, however, it may be necessary to

estimate the sales in the market. One might list all the business selling similar or

substitutable products in this market, estimate their individuah sale and total them.

Obviously, this is practical only if the number of business is small.

Detereining the trends in market is also done through a combination of primary and

secondary research. The critical element in this research is identifying trends that are

rele6ant. There may be a lot of things that are happening in your market, but do they all

affect your business in some significant way? When doing this research you may begin

by looking at the demographics. Are there shifts (actual or expected) in the number of

people in the location of the people in the age, sex, ethnicity, or income of the people in

the market?

Next consider whether there are significant changes in the opinions, outlook, or behavior

of the people in the market. Next consider the changing physical and economic

environment of the market area. Once you have compiled a list of trends that you think

will have an effect upon your business, decide what that effect will be. In many cases,

each relevant trend will have more than one effect upon your business.

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Non-demographic trends may also be found in second sources but is mostly found in

primary research. You should first talk to the people in the area in the position to know

change in the locality and its people. Speak to bankers, suppliers, and builder and

community leaders to get their input about changes. Following that, you may want to

undertake a survey or series of interviews with a small sample of the people in the area.

(Surveys or questionnaire that you use should be co-ordinate so that the same survey for

instance can be used to uncover information about you product, your competitors etc.)

Using the research:

Once the research is complete, analyze the information and see if you can answer, to your

satisfaction questions such as these: is the market large enough to support my business?

Should I broaden or narrow my market area? Taking the history, present trends and

expected changes in the market area into account, what is the outlook for this market in

the next two years, five , ten year? In addition to these types of questions, you should

analyze your research to answer questions about your operating methods. Do you have

information that suggests for instance where you should locate your business? If certain

area within your market are expanding while others are deteriorating. It may make sense

to locate in the expanding are. Market research can be combined with the procedures and

activities of making the business plan. In the case, the size of the market and the

estimated turnover are often the most important questions.

Stages in market research:

1. Analyze: First you must have a clear view about what you want to know. When

making your first business plan, the questions will be directed at the size of the

market and the estimated turnover. The question of the estimated turnover can be

divided into questions like:

*who is my target group?

*what is my target area?

*how many members of my target group live in my target area?

*what is the yearly expenditure on the product or service I intend to provide?

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*how many competitors do I have?

You will find that by formulating such question is much easier to answer the main

question. It makes it easier to define the information that you will need to answer and

how these data can be collected / obtained

2. Collecting the necessary data and using it:

In this stage you are actually collecting the necessary information. You will have to do

this in an efficient way, first through desk research then followed by field research, if

necessary. The next step is to put all your research result together. You have collected

data but there is no apparent connection yet. To clarify and to create a better insight your

can make calculations. Sort out and list all the information. You have collected. After

sough ting out everything, you will be able to find out if the collected data is enough to

answer all the formulation questions.

3. Making Conclusions:

The final step is to analyze the information and make conclusions. Have you found

answers to the questions and can you answer the main question with all the answer you

obtained? It is imperative that you remain objective. Many entrepreneurs tend to be

optimistic about their market and their estimated turnover.

Subjects for Market Research

1. Who is my target group?

Depending on the product or service you would like to sell, you can almost always define

a particular target group for your business. If you, for instance, are selling computers

school and suburbs will be your target group. If you are going to sell very exclusive

ladies fashion rich women will be your target group. If you offer services for small

business, the target group will be small businesses. So the first question about the target

group can be answered by writing the target group characteristics.

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2. What is my target area?

Use a map and make an estimation of the time your future customers will want to travel

to reach a company like yours. Most people prefer to do their daily shopping in the

neighborhood. In that case the target area is relatively small. But if you sell special

services or products, the target area might be larger. This is also the case if you sell

products to other companies.

3. How many members of my target group live (or visit) my target area?

Perhaps you have a special target group. Try to estimate what percentage of the whole

population belongs to your target group and again, refrain from being too optimistic with

your estimate.

4. What is the yearly expenditure on my product or service?

Sometimes your potential suppliers can be helpful; sometimes there is easy accessible

information available. If no information is available, you will have to do your own

research.

5. How many competitors do I have?

Again your potential suppliers can assist you, or such information may be available from

trade publications, classified telephone directories, or other sources.

6. Calculating the total market volume.

If you multiply the yearly expenditure by the number of people in the target area, you

will find the total market volume of this area. You have now made an estimation of the

possible total turnover for your company.

7. Calculate your own market volume

Now based on your analysis of the market and your target group’s need and requirements

and given the nature of your marketing strategy, estimated what your share of the total

market will be. Be realistic!

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Of course these calculations are far from exact. But making them will give you some idea

about possibilities and opportunities. If you have made an overview of the weak and

strong points of your competitors, you may find new markets and in any ease get a clear

view of your unique selling points.

Further discussion on my target group.

If no information is available, or you want to find more qualitative information, you will

have to set up your own inquiry.

For future entrepreneurs this can be done just by thinking of visiting competitors. The

main question that will need answering then is: what do my customers want from me?

Existing entrepreneurs can do research in their own enterprise by making a few notes on

each customer. To avoid less of time, it is use useful to t up and copy some kind of form

before you start doing this.

Perhaps, you can ask some customers one or two simple questions, like how they came to

know your enterprise, in what area they live? Etc. the point is that you should get a clear

view of your target group. Another possible subject could be whether your marketing-

mix (product, price, place and promotion) is the right one for your target group. It is also

important to take a close look at your (future) competitors. In which way are they better

or worse? Start by making a list of competitors. The telephone directory and the local

newsletter will provide you with the addresses. Then define what can be important selling

points which they have in your line of business.

To satisfy your customers, improve your sales and make a profit you need to find out:

*what product or services your customers want?

*what price your customers are willing to pay?

*at what place your business should be so you can reach your customers.

*type of promotion you can use to inform your customers and attract them to buy your

products or services.

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These are called the fours P’s of marketing. They all start with a P: Price, Place, Product

and Promotion. So they are easy to remember. The four P’s of marketing are the stepping

stone between the business and your customers. To reach your customers and increase

your sales you will need to learn about and use the four Ps’ of marketing. All four Ps’ are

very important and must be strong. If one or more Ps’ are missing, it becomes risky to

satisfy your customers and improve your sales. Satisfied customers will come back to buy

more from your business and will tell other people to buy from your business. Let’s face

each P one at a time.

1. Product:

To be successful in business, you must have the products and service that your customers

want. This is called product and it is the first P of marketing i.e. it is the first stepping

stone.

(I) Find out what customer need.

Customers buy goods and services to satisfy different needs, for example

Cold drinks satisfy a need to feel cool in hot weather

Bicycle satisfies a need for transport.

Radios satisfy a need for news and entertainment

Clothes satisfy a need to wear something comfortable and a need to feel attractive.

When you understand customers’ needs, you can decide what goods or service to

provide. For example, if a customer wants to buy biscuits for your store and they are out

of stock, buns can be a substitute for those biscuits that are out of stock because in this

case, the customer needs something for tea so buns satisfy that need. A successful

business finds out what customers want and need. Then the business provides the

products and services that satisfy that need of their customers. Because you cannot risk

selling what your customers don’t need.

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Sometimes customers change their needs and wise thing to do is to listen to what your

like and do not like. When their needs change, you too have to change your products and

services to satisfy the new needs. Do more market research. When you know what your

customers want, you can provide those products or services and increase your sales.

(ii) Provide what your customers want.

Modern Furniture ltd and the other carpenters have a big problem. They all were making

the same kind of chairs for many years. Many of them have a habit of copying each other

and because of this each business sells very little.

Customers want to look at different products so that they can choose what they like best

For example

Some customers want a different design

Some customers want high quality and are willing to pay extra for that

If you always provide products or services of high quality, customers will trust you and

your business.

Remember: customers are the most important people for business. Always keep your

eyes and ears open to understand their needs. Make sure you provide the products or

services the customers want not what you want because you are not the customer.

Often ask yourself these kinds of question:

Do I have the products customers want?

Why did I decide to see these products?

What products or services do I sell?

Do any of my products not sell well?

Do I keep products that do not sell well?

If the answers to the following questions tell you that customers want different products

or services, you can:

Make or sell completely new products or

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Improve what you already make and sell by changing something about your product. For

example: the design, comfort, colour, size, customer service and the guarantee.

If you sell products which need packaging, you can also change the packaging.

Packaging protects your products and makes them easier to handle. Packaging adds to

your cost. But packaging can make your products more attractive and help you increase

your sales.

You may decide that the products and services other businesses provide are much better

than the products or services you can afford to make or sell. The changes you would have

to make to your products are too big and would cost too much. When this happens, you

may decide to stop selling that product. By doing market research, you can decide on a

better product or service for your business to sell.

1. Look for new ideas

Your products may not sell very well. Lots of other businesses may sell the same

products. Customer may not want to buy your product any more. If the products you sell

do not make much profit, think of new ideas, here are some examples:

If you only make and sell household furniture,

Find new customers such as schools and offices by selling desks, helves or office

furniture.

If you make bread

Find more customers such as restaurants, hospitals and schools.

If you are selling vegetables and fruit

Think what new products you can make, customers prefer to new products.

Before you start making new products, make sure you do market research:

Think of ideas and ask others. Get as many ideas as possible.

Find out which of those ideas can be made into products that customers would

like and would be willing to pay for

Make sure there are enough customers who want your products.

Make sure that your market gives your business a high enough profit

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2. Price

This is the second P of marketing. To set the price can be difficult but is very important.

Your business may have very good products or services, but if your prices are wrong, you

will not sell much.

When you work out a price on a product or a service, you need to know how price cost,

and profit work together.

COST + PROFIT = PRICE OR PRICE – COST = PROFIT

$ 7 + $3 = $10 $10 - $7 = $3

You total profit from sales depends on:

How much profit you make on each product or service

How many of each product or service you sell

Sunshine dairy have tried both high and low prices:

When they put a high price on chocolates, they make a big profit on each

chocolate.

But at that price they sell one or two chocolate a day

When they put a low price on those chocolates, they make a small profit on each

chocolate.

But at that price they sell many cakes a day.

The number of products sold X profit per product = Total profit

E.g. 1 chocolate * $5 profit per chocolate = $5 total profit for chocolates per day

5 chocolates * $2 profit per chocolate = $10 total profit for chocolates per day

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So, you can make a big total profit on a low price. It all depends on how many items of a

product you sell and how much profit you make on each item.

How to set your prices

In general, you prices must be low enough to attract customers to buy and high enough to

give your business a profit.

You must have certain information before you decide what prices to change your

customers. To set prices you need to:

1. Know your costs

2. Know how much money the customers are willing to pay

3. Know your competitors’ price

4. Know how to make your prices more attractive

1. Know your costs

You must know the total costs of making and selling each product or service. The total

costs include materials, labour, rent, electricity, transport and all other costs in your

business. To make a profit, your price must be higher than your total costs for that

product. E.g. the total costs of making one meat pie are $2. To make a profit I must sell

each pie for more than $2.

A price lower than the total cost gives you a loss e.g. $1 -$2 = -$1: $1 = loss. A price

higher than the total cost gives you a profit e.g. $3 - $2 = $1: $1 = profit

2. Know how much your customers are willing to pay

Customer must be willing to pay your prices. If you set a price which is too high, you will

soon know because you will sell very little or nothing, e.g. Sunrise restaurant are

planning to sell a meat pie for $3.50 and they asked customers. Almost all of them said

$3.50 is too much money to pay for a meat pie. Many of them said they would not buy a

meat pie if it costs more than $$3.25. Sunrise restaurant now know the price for meat pies

should be somewhere between $2.00 and $3.25:

$3.25 is the price the customers are willing to pay.

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If the price the customers are willing to pay is lower than your costs, try to cut your costs.

If you can not cut your costs, find another product or service to sell.

3. Know your competitors’ prices

Find out how much competitors charge far the same or similar products or services to

yours. In general:

If your prices are lower than your competitors; you may attract more customers to

buy from your business.

If your prices are higher than your competitors; your customers may buy from

your competitors

Sunrise restaurant (above) found out that most competitors charge $3.25 for meat pies.

There may be some special reasons to why you charge or lower prices than other

businesses

You may want to charge a lower price, for example!

If your product or service is new and people do not yet know about it.

If you want to attract new customers.

You may want to change a higher price, for example:

If customers feel that your product or service is better than your competitors

If you provide some extra service such as longer opening hours, free delivery or

good guarantee.

Sunrise restaurant has not decided what price to charge for a meat pie. It is thinking of

charging $3.00. If customers buy from other places they have to pay $3.25

4. Know how to make your prices attractive

In the end, Sunrise restaurant decided on a price of $2.99 for the meat pie. $2.99 sounds

much less than $3.00, even there is only one cent different.

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To attract customers to come to your business, you can sometimes use special offers-

even with low profits. When your customers come for the special offers, they often buy

other products as well.

Customers do not like to find the same special offers each time they visit your business.

So change your special offers often.

When you begin to sell a new product or service, you want to attract people to try it. You

can set a low introductory price that only gives you a small profit for the first few weeks

that you sell the new product. If customers like the product, you can slowly increase the

price so that it gives you a higher profit.

A discount also means a lower price. You can get a discount from a supplier. You can

give a discount to a customer.

Here are some examples:

If a customer buys a large quantity, you can offer a quantity discount

If a customer pays cash, you can offer a cash discount

At certain times of a year, you can offer a seasonal discount

3. PLACE

The third P in marketing is called Place. You business may have good product at prices

that customers are willing to pay but sales may still be low. The reason may be that

customers do not know where to buy your products or services which is the place. Place

means location- where your business is. Location is especially important for retailer and

service operators who need to be where their customer are.

Place also mean different way of getting your products or service to your customers. This

is called distribution. Distribution is especially important for manufacturers.

To sell well, most retailers and service operators need to be where their customers are.

Good places for retailer and service operators are where many people pass by or where

many people live.

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NB. Make sure the business is not where there are too many other businesses selling the

same products that you sell.

For many manufacturers, it is not always important to be near their customers. It is often

more important to have:

Cheap rent or land

Good and easy supply of raw materials

Most manufacturers do not have their businesses in the business centre.

If your business is not where your customers are, you must find to get your product

where it is not where it is easy for customers to buy. This is called distribution.

Distribution is particularly important for manufacturers. There are different ways to

distribute your products to your customers:

You can sell directly to customers who use your products. This is called direct

distribution.

You can other businesses to sell your goods for. Those businesses are mostly retailer or

wholesalers. This is called retail distribution and wholesale distribution.

Direct distribution: this means selling your products directly to customers who use

them. When you your products directly to customers who use them, you can talk to them

and find out what they like, want and can afford, so direct distribution is most useful for

those manufacturers who make products to each customers’ order. But direct distribution

takes and can be expensive for your business. For example, cost of transport, wages or

salary for time spent selling or delivering goods to customers. Retail distribution: means

selling your products to shop and stores who then sell to the customers who use the

products. Retail distribution is useful for those manufacturing businesses that make

products in large quantities. Retailers often reach more customers in a larger area than

your business can do on its own. When you sell your products to retailers you reach more

customers, your sales may increase and your business can grow.

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Retailers can do a lot of work that your business has to do on its own if you sell directly

to the customers who use your products. For example retailers:

Keep in contact with your customers. This gives you more time for production

and other activities.

Stock your products, this helps your business to have less money tied up in stock

Help promote your products by advertising, etc.

Because retailers do a lot of work for your business, you have to change them a lower

price than you would charge the customers who use your products. But retailers normally

pay you immediately when they get your products. Selling products to retailers also

means that

You may lose contact with the customers who use your products. You may not

always know exactly what they like and want.

You products may not be promoted enough. Retailers often sell your competitors

products too.

Retail distribution is most useful for your business if you make goods in large quantities

and you

Make standard products which normally do not need a lot of contact with customers

about design, colour, size, etc, for example, hair oil or shampoo

Make low priced products that customers buy often- for example making soap

Have many customers and it take a lot of time to stay in contact with each customers- for

example making standard cups and plates

Have customers in large area so that it is difficult, takes time and is expensive to reach all

of them- for example, making farming equipment.

Retail distribution:

Manufacture - Retailer – Customer

Makes the product buys and sells the product uses the product

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PROMOTION

Your business may be in a good place, have good products at prices that customers are

willing to pay but your sales may still be low because you do not tell people about your

business and what it can offer. This is called Promotion and is the fourth P of marketing.

Promotion means informing and attracting the market to by your products or services. Do

not sit and wait for customer to come to you. Do promotion, sell more and increase profit

by:

Advertising- making customers interested

Sales promotion- getting customers to buy more

Publicity- getting free promotion

Improving your skills as a salesperson

(i) Advertising: advertising is giving information to your market to make people

more interested in buying your goods or services. Some ways of good

advertising for your business without spending a lot of money

Signs:

Use signs so that people know and remember the name of your business, what it sells,

where it is when it is open, and so on. Use clever words to make more and buy. Bright

colours clear writing and or picture or symbol will make more people see your signs. Do

not put too much information on your sign. It is difficult to read a sign with a lot of

information. It is a good idea to find a good sign maker to help you. Put the signs where

people can see them, for example, a window, door, wall, roof, etc.

Boards posters and handouts

Use boards, posters and handouts to tell customers about special offer, discounts, new

products and so on. You can use a cheap paper or even chalk and a chalkboard. Write on

the boards, posters, and handouts and using the information from the market research, put

the posters where many people can sell them. Ask your customers to give your price lists

and specials to their friends and other people who may be interested in your products or

services.

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Your sales must be high enough to pay for the advertising costs. Advertising which does

not increase your sales is a waste of money and time, leave it.

(ii) Sales promotion: it is everything you do to make customers buy more when

they have come to your business. You can do it in many different ways.

Displays: keep your business well organized, well lit, clean and fresh looking, attractive

and products being well displayed.

Display is the way you arrange products. Display is important for all business, especially

for shops and stores. Good display makes it easier for customers to see your products so

they can choose and buy. Some of the ideas on how to display goods to increase sales are:

1. Put your goods in groups

Put similar products next to each other. This makes it easier and quicker for customers to

find what they are looking for, e.g. put cleaning materials together.

2. Show the prices clearly

Customers want to know the prices of goods without having to ask you. You can show

the price near the product and it must be written clearly for customers to see.

3. Make special displays

Use special display to sell more of your regular goods, seasonal goods or goods. You can

also use special displays for goods which have been selling slowly and goods which are

slightly old or damaged.

You can also let your customers taste or try new products so as to make them want to

buy. Or have a competition and offer a price, e.g. BUY for $50 or more and win a set of

pots. You can demonstrate by showing customers to use your products e.g., solar stove,

sell products that go together e.g. torches and batteries.

In making sales promotion:

Be creative, use your own ideas and try something different

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Keep customers interested. Change the type of sales promotion often and only use

each for a short time.

Do not use too many types of sales promotion at the same time, customers may

feel that you are forcing them to buy,

(iii) Publicity. It is a free promotion through an article in a newspaper or

magazine which tells people about products and services. The article promotes

your business. Good publicity increases your sales.

It is not easy to get publicity for your business. You can write an interesting letter to a

local newspaper, magazine or radio and describe what your business does and how it

serves the community. If they think they can make a good article about your business

they might come and interview you. You cannot control what someone writes about

business. Make sure you do not get bad publicity.

(iv) Improving you skills as a salesperson

You have attracted customers through good advertising, good sales promotion and good

publicity but your products are not yet sold. How well you will sell now depends on you.

Your skills as a salesperson can make the difference between success and failure.

To improve your skills as a salesperson and increase your sales you need to:

(i) Know your customers and their needs

(ii) Know how to treat your customers

(iii) Know your products and how to sell

1. Know your customers and their needs. Customers are different, for example:

Some customers can never make up their minds

Some customers are always in a hurry

Some customers are careless with their money

Some customers never have enough money

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To be successful, try to understand and to get to know each customer. First find out what

the customer really needs:

By listing and asking questions

Then satisfy the customers’ need

By giving advices

By offering suitable products or service

2. Know how to treat your customers

Successful salespeople try to sell things through the customers’ eyes. Treat your

customers the way you like to be treated when you are customers:

Greet your customers, call them by their names

Be polite and friendly so that customers feel welcome and enjoy visiting your

business.

Dress well, look tidy and clean

Offer your help

Be patient, give customers’ time to ask questions and decide if they want to buy

Be honest and trustworthy. Tell your customers the good points and bad points

about the product

Avoid arguing with customers, make them feel right

Thank and appreciate your customers for coming to your business.

Conclusion:Marketing is very important in every business because the viability of the business can be assessed through it. Marketing also highlights the following: Strengths, weaknesses, opportunities and threats in the business. We cannot do business with marketing whether in service or production enterprises.

BIBLIOGRAPHY

Michael A. Kamins PhD (2003).

Sales and Marketing. Published by: Listen and Live Audio, USA.

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