marketing personal strategies.docx

8/12/2019 Marketing Personal Strategies.docx

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Marketing Personal

Strategies


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Table of contents

1. Market and Marketing Definitions....................................................... 1

2. Market Functions.................................................................................. 23. The Development of a Marketing Strategy........................................ 3

4. Marketing Concept............................................................................... 7 External Constraints ......................................................................... 7 Understanding and influencing Buyer Behaviour ............................. 8 Forces that influence buying Decisions ............................................ 8 Economic Determinants of Demand ................................................. 9 Internal psychological Variables ....................................................... 9 Social and cultural Influences ......................................................... 10

5. Market Segmentation......................................................................... 11

6. Marketing Research........................................................................... 11 Marketing Plan Format ................................................................... 14 Marketing Plan Questions .............................................................. 15

7. Product Development........................................................................ 16 Product Decisions ........................................................................... 16 Branding and Packaging ................................................................ 16 Building the Product Mix ................................................................. 16 Product Innovation .......................................................................... 17

8. Pricing Decisions............................................................................... 18 Setting Base Price .......................................................................... 18 Pricing in the Distribution Channel ................................................. 18

9. Channels for Distribution and Logistics.......................................... 18 Selecting Distribution Channels ..................................................... 19 Selecting and motivating Distributors ............................................. 19 Physical Distribution or Logistics .................................................... 20

10. The Promotional Programme............................................................ 2011. Advertising.......................................................................................... 21

Importance of Advertising ............................................................... 21 Advertising Channels...................................................................... 22

Attachments

Marketing Guide Market Field Study Plan

List of SBS Network Business Information Handbooks List of SBS Consultants


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1. Market and Marketing Definitions

Marketing is an important operating arm of a business enterprise. Its activities begin evenbefore the product or service is produced and continue after the sale is made. This paper will

provide an overview of the marketing function. Starting with basic definitions of marketing andmarket and discussing marketing functions and the role of marketing in the economy, the paperproceeds to cover the development of marketing strategy, consumer behaviour and marketingresearch, and concludes with a treatment of the marketing decision areas - product, price,distribution and promotion.

Marketing is as old as history itself. It embraces the activities we engage in to satisfy oureconomic needs and wants.The central idea in marketing is the transaction, which is the exchange of desired objects by twoparties. Such exchange could be product for product (as in trade by barter), or product formoney in its various forms. For marketing or exchange to take place, it is necessary that therebe:

1. two or more parties who have unsatisfied wants;2. some products or services and money to exchange; and3. some means of communication between the parties involved.

We now give a definition of marketing.Marketing is the set of activities that facilitates exchange transactions involving economic goodsand services for the ultimate purpose of satisfying human needs. What activities are implied inthe above definition? They are many, but will be discussed under 'marketing functions'.

Market as product buyers

To the African the word 'market' almost invariably means the marketplace which not only fulfilsits economic role as a place for buying and selling, but also serves as an important social,political and religious meeting place especially in the rural areas. A second meaning of market,which is to be emphasised by us, is market as consisting of buyers of a product or service. Ourformal definition of market is:

A market for a product or service consists of individuals or organisations that have purchasingpower and that are current or potential buyers of the product or service.

We should note three things about this definition.

1. A market could be ordinary people purchasing according to their needs or it could beorganisations such as business firms, non-profit institutions such as schools andhospitals, or the government - federal, state or local.

2. To be included in the market for a product an entity must have purchasing power, that

is money in its various forms - cash, cheque, credit.3. Current buyers and potential buyers are included in the definition of a market. Thus,

for a product being newly introduced in an area, the market consists entirely ofpotential buyers. A major challenge to marketing is to convert potential buyers toactual buyers; in short to create a customer.

A fourth meaning of market is the verb sense, that is 'to market a product'. It suggests theperformance of activities needed to bring an existing product to buyers, a meaning clearlyrelated to the meaning of marketing. We now take up a discussion of these activities ormarketing functions.


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2. Marketing functions

Within any business organisation, the marketing arm of the company fulfils some importantfunctions which are activities that must be performed to move products from producers toconsumers. From the literature ten such activities may be identified as follows.

1. Product Development Marketing advises on what to produce; the quality, style,design, brand name and packaging - all based on consumer and market research.

2. Pricing Marketing plays a large role in setting prices, whether at, above or below thecompetitor's prices, and in determining a system of discounts for the middlemen whohandle the product.

3. Buying This involves selecting from an assortment of goods, determining quantity andquality, selecting sources of supply and negotiating the terms of purchase. (This issometimes called purchasing or procurement.)

4. Advertising is the impersonal presentation of goods through the mass media - radio,television, newspapers, etc. Advertising agencies may assist marketing in performingthis function.

5. Personal selling. This is selling done through person-to-person contact. A largenumber of salesmen are engaged in outside sales work or in retail sales in shops andmarket-places. The sales force must be properly selected, trained and motivated toperform.

6. Sales Promotion and Merchandising This involves the development of such tools aspoint-of-purchase displays, window displays, free samples of the product, exhibitionsat trade fairs, news releases, price reductions during special 'sales' and so forth.

7. Physical Distribution Marketing arranges for the physical handling of goods: storage,transportation and proper inventory management and delivering the products/servicesto customers.

8. Market research Marketing must gather and analyse information about demand,

consumer wants, competition, government policies, new products and generalchanges in our social structure. This function underscores the fact that marketingbegins even before the product is produced.

9. Credit Management and Financing. Credit is often used in serious businesstransactions where firms buy and sell on credit. In addition, various types of financingprovide permanent as well as temporary capital for the marketing process.

10. Post-sale Transactions. Marketing must arrange to handle customer complaints afterthe sale, and provide for after-sales service, especially for machines, equipment andconsumer durable goods. This shows that marketing does not end with the ringing ofthe cash register.

3. The Development of a Marketing Strategy

Any organisational entity that engages in marketing activities to serve a customer group with aproduct or service is a marketer. We now consider how a marketer plans his marketingprogramme. This is part of the overall job of marketing management, which is concerned withthe tasks of setting marketing goals, analysis of market conditions, planning the marketingeffort, setting up suitable organisation, execution of plans and control of operations.

Marketing mix: variables controlled by the marketerA key input into the development of marketing strategy is market analysis, which is a detailedinquiry into market conditions - buyers (size, location, quantities purchased, attitudes andpreferences, etc.), competitors and middlemen carrying the product. The marketer then chooses

a target market to cultivate and develops his marketing strategy by making decisions regardingthe product, the price, the distribution and the promotion in order to satisfy the needs of thetarget market and provide the best chances of achieving the stated marketing goals.


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The combination of controllable variables - product, price, distribution and promotion - whichspells out the marketer's strategy is called the marketing mix. The kinds of decisions to be madefor each component of the mix are as follows.

1. Product assortment: design, quality, branding and packaging; product additions,modifications and deletions.

2. Price Setting base price; middlemen's margins, allowances, discounts; freightpayments and geographic considerations, product-line pricing; charging establishedprices.

3. Distribution Selecting channels of distribution; selecting and managing distributorsor middlemen to carry the product; establishing a logistics system for storing, handlingand transporting the product.

4. Promotion to stimulate market interest in the product by determining the relativecontributions to be made by advertising, personal selling and sales promotion (forinstance, free samples); choosing advertising message; creating advertising copy,choosing suitable media; managing the sales force.

The concept of the marketing mix was popularised by Neil Borden in 1954. Another author,Eugene McCarthy in his book Basic Marketing: A Managerial Approach uses a usefulmnemonic - 'the Four P's' - to denote the four elements of the marketing mix - Product, Price,Place and Promotion - where 'Place' stands for distribution.

The key notion suggested by the word 'mix' is that the plan of action is an integrated one inwhich the decisions on the four variables make sense in relation to one another. Thus, a highquality product would ordinarily carry a high price, be distributed through retail outlets having aquality image and the advertising would be in appropriate media that could display the superiorfeatures of the product.

Another point to be noted is that when a marketing mix is developed, an alternative mix thatdiffers on all or some of the four decision variables might conceivably be used to meet the

needs of the market and the goals of the marketer. This means that there are different ways toreach a target, but none is guaranteed success ab initio. To illustrate, we consider alternativemarketing mixes for the marketing of bottled palm wine.

ProblemSuppose that market analysis indicates promising opportunities for the marketing of bottledpalm wine, where it is assumed that the technology for the preservation of palm wine has beenperfected. Sketch two alternative marketing strategies that could be implemented.

General observationsPalm wine is an alcoholic drink which is in direct competition with beer. Because the wine tapersare getting older and young men in the rural areas are not available, or if available notinterested in learning the skill of wine tapping, the product is getting more and more scarce and

its price is virtually exceeding that of beer. The bottler of palm wine, under the presentconditions of scarcity of supply of the raw material, will therefore have the major problem of howto make the price of the finished product competitive with the price of beer.

Marketing mix 1One strategy is to make the product of very high quality, and package it in a distinctive bottlethat does not look like the beer bottle. For pricing, the price is set higher than beer but not ashigh as imported foreign wines. For distribution, the kind of high volume distribution channelsutilised for beer is not used; instead the channels for hot drinks and foreign wines is used; thismeans that the product is displayed on shelves in shops. For promotion, it is now apparent that,given the decisions made already on the other components of the marketing mix, thepromotional job is to present the bottled palm wine as a prestige drink that is surrounded bytradition and certainly superior to beer; a product that one should use in traditional and other

important ceremonies as well as for quiet enjoyment. Advertising copy that will properly portraythis image could include traditional ceremonial settings, and drinking with cow horns and


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calabash cups instead of glasses. Actually, the product is positioned to compete with foreigntable wine and not with beer.

It is apparent that the above strategy will not lead to very high volume sales, but with amoderately high price the level of sales could lead to profitable operations.

The Marketing MixPRODUCT PRICE

- Scope of product mix- Depth of product mix- Quality- Design- Packaging- Maintenance- Service- Warranty service- Possibility of returning a

purchase

- Price positioning- Rebates and conditions of

payment- Financing conditions

PROMOTION PLACE- Advertising- Public relations- Personal sale- Sales Promotion- Brand Policy

- Channels of distribution- Distribution density- Lead time- Stock- Transport

Marketing mix 2An alternative strategy, especially if the wine supply problem could be solved, for examplethrough palm plantation development and improved tapping methods, is to position bottled palmwine as a direct substitute for beer. The product will be of good quality but will not be fancifullypackaged; in fact, beer bottles could be used. The emphasis will be to reduce the costs of

production as much as possible. The price will be competitive with beer, that is, it will notexceed the price of beer.

Distribution channels will be similar to those used for beer distribution, that is there will beappointment of major distributors and attaches as well as direct supply to major customers suchas hotels and clubs. Promotion will portray the product as more satisfying and nourishing thanbeer, a product that fits into any occasion - whether traditional or modern. Provided the price islow enough, the wine can be presented as the common man's drink, whether in the village or inthe city.

We have so far given only the bare outlines of two alternative marketing mixes. Many detailsremain to be filled in for actual implementation. It cannot be determined ahead of time whichstrategy will be more successful than the other, especially as the effects of uncontrollable

variables such as competitive reactions are not known.

4. Marketing concept

If a business conducts its affairs in such a way that the needs of its customers are always keptin view, and every effort is made to give value and satisfaction to the customers while pursuingits own goals such as profit, it is said to be guided by the philosophy of the marketing concept.Such expressions as 'the customer is king' or that 'marketing should begin and end with theconsumer' or being 'customer oriented' are all statements expressive of the marketing concept.

The marketing concept is quite an idealistic philosophy, especially in Africa where various basicproducts and services are in scarce supply, and the sellers have little interest or motivation inpleasing customers. Further, government monopolies exist and seem unconcerned about


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customer needs or complaints. The marketing concept is likely to be applied more seriouslywhen there is a strong competition in the market; the marketer who creatively caters tocustomer needs is likely to win a differential advantage over less imaginative competitors andthereby realises more sales and profits.

External constraints: variables not controlled by the marketer

We have seen that a marketer controls the variables - product, price, distribution and promotion- to determine his marketing mix, and that he should execute his plans with the philosophy ofthe marketing concept. In addition, he has to contend with a number of external variables thataffect the marketing effort. These variables are not ordinarily controllable by the marketer andare therefore classified as environmental constraints. They include competitors, the state of theeconomy such as growth or recession, consumers and their unpredictable behaviour, suppliersand middlemen, business-related laws and regulations, technology, the physical environmentsuch as natural resources and climate and the larger society with its culture. These complicatethe marketer's tasks enormously and lead to a situation where strategies that were effectiveyesterday may not work at all today.

It should be noted that while the environmental variables affect marketing, the environment inturn is affected by marketing. For example, consumers' needs, values and preferences

determine what is produced and how it is presented, and the larger society with its culture -customs, languages, religions and so on - casts a pervasive influence on the marketing effort.Marketers' actions in turn influence society by exposing people to new products, services andideas, thereby for better or for worse breaking down the traditional modes of behaviour andfostering new attitudes and habits.

Understanding and influencing buyer behaviour:Knowing your consumerIt cannot be over-emphasised that marketing should begin with a thorough understanding of theconsumer himself - his needs, location, preferences, attitudes, perceptions and socio-economiccharacteristics (age, sex, income, etc.). The marketer then tries to build the informationgathered into the design and execution of his marketing strategy and tries, through promotionalmethods such as advertising, to influence consumer attitudes and behaviour in favour of his

product or service.

When a marketer launches his product or service and fails to secure sufficient consumerpatronage, it is often a signal that he has not done his homework with regard to consumers'needs, though occasionally it might be due to the inept planning and execution of his marketingprogramme.

It is sometimes necessary to make a slight distinction between 'buyer' and 'consumer' becausethe person who makes the buying decision is not always the ultimate consumer or user of theproduct. The marketer is immediately interested in understanding the behaviour of the productbuyer, but he should also be interested to know how the product is used and be concernedabout the satisfaction (or lack of it) of the consumer.

Buyers may be conveniently divided into household buyers and non-household buyers. Thelatter group includes industrial, commercial, institutional (schools, hospitals, etc.) andgovernment buyers.

Forces that influence buying decisionsThe forces that determine what, when, where and why consumers buy and the prices they arewilling to pay are varied and interrelated in a complex manner. These may be convenientlyorganised into three groups.

1. Economic determinants of demand.2. Internal psychological variables.3. Social and cultural influences.

Economic determinants of demand

The key economic factors that influence buyer behaviour are income, availability of credit,expenditure patterns, prices of the product and prices of complementary and substitute goods


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and elasticity of demand. Total household income minus all taxes is called disposable income.The portion of disposable income that is left over after expenditures on food, housing, clothingand other necessities is called discretionary income, which is available for expenditure onluxuries and other non- essentials.

There are two kinds of elasticity of demand: income elasticity of demand and price elasticity of

demand. Income elasticity of demand is defined as the percentage change in the quantity of acommodity consumed divided by the percentage change in income. Elastcity indicatessensitivity of demand when either the price of the product changes or the income of the buyerchanges. To take demand for food as an example, it turns out that income elasticity of demandfor food is lower for rich families than for poor families. This is so because if incomes arealready high, further increases will not influence food consumption substantially, but if incomesare low, a large share of additional incomes will be spent on food.

Price elasticity of demand is defined as the percentage change in quantity demanded divided bythe percentage change in price. When this quantity is greater than unity demand is said to beelastic, and if less than unity demand is inelastic. The marketer is interested in the effect of pricechanges on total revenues. When demand is inelastic, price changes will result in less thanproportional changes in quantity sold, thus revenues may not be eroded if price goes up. As an

example, the demand for drugs and medicines is usually price inelastic, because the need tosecure health is essentially insensitive to price or cost.

Internal psychological variablesAn important factor in the buying decision is the buyer himself. Why does she/he want to buythe item? Is the type of person related to the desire to buy the item? How does she/he receiveand organise information about the item? How does s/he feel about the item in terms of likesand dislikes? What does s/he know and remember about the item? These questions areprobing the effects of the internal psychological forces of motivation, personality, perception,attitudes and learning, respectively. For any given buying situation, one force may be dominantor multiple forces may be at work.

We should particularly emphasise the role of attitudes and preferences in purchase decisions.

An attitude is a learned predisposition to react to an object in a certain way - positively ornegatively. It describes one's feelings in terms of liking or disliking the object. A preference isthe condition of liking one object better than another. A positive attitude will lead to the purchaseof an item, but a negative (or neutral) attitude will not. A major task of advertising is to inducepositive buyer attitudes towards the product. Behaviour itself may affect attitude even as attitudeaffects behaviour. A person may not have been interested in a particular product and may havehad no attitude towards it, but after trying it she/he develops an attitude - positive or negative.Or a person may have had a negative attitude before trying a product and then modifies theattitude to positive after trial. This is the main reason why the giving out of free samples of aproduct is a key sales promotion tool.

Social and cultural influencesMan is a social being whose behaviour is influenced by other persons and by the groups he

belongs to or aspires to belong to (called reference groups). Family members, friends,neighbours and work associates are familiar examples of people who influence us. Socialconformity is strong in buying decisions. It is sometimes surprising how many things we ownthat are also owned by people we associate with. Purchase decisions for certain productcategories, especially those that are 'conspicuously consumed', are particularly prone to socialinfluence. Examples can be found in clothes and fashions for young people on whom peergroup pressure is strong, cars for men, clothes and jewellery for women and home furnishingsand durable goods for households on which friends, relatives and neighbours exertconsiderable influence.

Going beyond personal and group influence, we consider the larger society or culture. Peoplelive in a cultural milieu that embraces their history, values, morals, customs, art and language.Culture exerts a broad influence on buying behaviour and determines the kinds of products that

may be used by the people. For example, Muslims would not buy pork products or alcoholic


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5. Market segmentation

Markets consist of buyers who differ in many ways and who may therefore be classified intosub-markets or market segments on the basis of a suitable characteristic or variable. Variablessuch as geographic location, age, sex, income, social class, benefits sought from use of product

or problems faced have been used to segment or subdivide markets. Assuming that a marketcan be subdivided, the marketer then decides whether to ignore the existence of marketsegments and make one product offer to the entire market, or to recognise the existence of sub-markets and design into the product those features that meet the unique needs of one, some orall of the identified segments. In the latter case, all other aspects of the marketing mix - price,distribution and promotion - will be geared to the demands of the segment(s).

Obviously, any market segment isolated should represent substantial demand before it wouldbe worth giving it special attention. It is apparent that a marketer who wishes to enter a marketalready crowded with competition should proceed by first doing market segmentation (iffeasible) to determine if there exists a segment ignored by the other competitors. Of course, ifthe marketer feels that he has a superior product, he might decide to challenge the competitionin their entrenched segments.

6. Information for Decisions: Marketing Research

Adequate information is the life-blood of decision-making and management. Companiesnormally develop their own regular system of gathering marketing information. In Africa, thereappears to be a heavy dependence on field reports filed by sales representatives concerningmarket conditions, competitors' actions, middlemen and consumer reactions to companies'products and marketing policies. In many cases a separate research department does not exist,little or no research budget is provided and work is rarely sourced out to outside researchorganisations. Such outside research firms are few today because the demand for their servicesis low.

Benefits of research:Various benefits can be derived by taking marketing research seriously even if it is done on amodest budget. Marketing research is the primary tool for conducting market analysis where asmuch information as possible is gathered about consumers (e.g. their needs, attitudes andpreferences, socio-economic characteristics), competitors (their products, prices, etc.) andmiddlemen (their types, discounts or margins enjoyed, etc.).

The marketer exploits the information gathered from market analysis to plan his marketing mix -

product, price, distribution, and promotion. Research can tell what products are needed, whichproduct features are popular, which price ranges are acceptable to buyers, which retail outletsare favoured by buyers, through which mass media the buyers are likely to be reached and soforth.

When the marketing plan is launched, research is needed to monitor results and investigatevarious kinds of problems relating to the marketing effort. For example, research is needed tomeasure the effectiveness of advertising or to determine the reactions of middlemen to a newproduct.

Costs of researchMarketing research may be a costly undertaking if properly done. The value of informationobtained should always be balanced against the cost of acquiring it. Cost elements include

personnel and materials for field work and data processing and report preparation costs.


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The option of not doing research should always be considered, especially when the decisionthat may benefit from it must be made quickly. Indeed, the problem of time availability is aserious one, because many marketing decisions must be made quickly and yet good researchrequires ample time for proper design and execution.

The marketing research process

Marketing research may be defined simply as the gathering and analysis of information to guidemarketing managers in marketing planning and problem solving. It is a systematic process thatinvolves some recognisable steps. Four basic steps of marketing research are:

1 Problem formulation.2 Situational analysis and exploratory research.3 Formal research.4 Solution.

Problem formulation

A clear definition of the research problem is probably the most important research task. But it isnot an easy matter. Frequently, the symptoms of a problem - for instance declining sales - areobvious to all, but the cause or causes are less obvious. The researcher holds discussions with

the sponsor of the research in order to understand the latter's problems and marketingobjectives. The context or environment in which the problem is embedded is examined to gain abetter insight into the problem. This involves asking about internal (company) and externalfactors that may bear on the problem.

Situational analysis and exploratory researchThe key characteristic of the second stage of the research process is consultation of secondarysources of information. We should now distinguish between secondary data which are data thatexisted prior to the need to solve the problem, and primary data which are fresh data collectedspecifically to solve the problem. Secondary data sources include internal company records onthe product's sales, costs, customers and other marketing variables; outside sources includepublications by government agencies (in Africa, especially the Federal Office of Statistics) andprivate bodies; relevant research both inside and outside the company; informal interviews with

informed people both inside and outside the company.

If the problem was properly identified in the first step, the analysis in step 2 may be sufficient tosolve it, in which case further formal research would be unnecessary. Usually, the analysis ofthe second stage leads to a better definition of the problem and very likely suggests the needfor formal research.

Formal researchFormal research entails the collection of primary or fresh data to solve the problem or meet theinformation need. The most frequently used formal research method is the marketing survey.Major activities in survey design and execution involve questionnaire construction, the actualdata collection (through mail survey, telephone survey or personal interviews) and the editingand coding of returned questionnaires. The population of respondents from whom information is

to be obtained could consist of individual consumers, households or organisations. Although aselection of a representative sample from the relevant population is made, sometimes it will bewise to do a census, that is to include every member of the population, if the numbers are small.This is often the case when organisations are surveyed; consumer surveys, on the other hand,usually involve use of samples because of the large numbers of consumers.

SolutionThe final step in the research process is data analysis and interpretation of results. The simplestanalytical method, especially for surveys, is ordinary tabulation and frequency counts, followedby calculation of percentages. For example, if respondents were asked if they would purchase aproduct at a stated price, research might find something like 'forty per cent of respondents saidthey would definitely buy, while only twenty .per cent said they would definitely not buy.'

When the researcher completes his data analysis and interpretation of results, he prepares hisrecommendations for the company. A written report embodying the recommendations should,


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as far as possible, be free of technical jargon, be in clear style and use charts and tables wherenecessary. It should be reasonably brief and above all include specific action implications forthe sponsor. Examples of concrete recommendations are: 'The company should seriouslyconsider increasing the price of the brand by twenty per cent.' or 'The current budget foradvertising should, at a minimum, be doubled.'

Marketing decisions areasThe key areas in which marketing managers have to make decisions correspond to the fourcomponents of the marketing mix: product, price, distribution and promotion. Sales forceoperations may be isolated from promotion as a separate area of decision making; ifinternational marketing is undertaken by a company, then all the above decision areas will berelevant in the context of serving markets outside national boundaries. Having earlier outlinedthe kinds of decisions made while discussing the marketing mix, we shall now elaborate on thekey decisions only.

Marketing plan format1. Description of Product(s)2. Target Market Segments3. Target Market Area4. Demand Analysis5. Supply Analysis6. Competitors Marketing Strategies

Product Strategy Price Strategy Place Strategy Promotion Strategy

7. Project Marketing Strategies Product Strategy Price Strategy Place Strategy Promotion Strategy

8. Sales Forecast9. Fixed Assets for Marketing

10. Total Marketing Expenditure Budget

Marketing plan guiding questions1. What is/are the product(s)?2. Which target market segment does each of the product

aim at? or: To whom will the business sell its products?3. Which geographical areas will be the chosen

segments?4. What will be the demand for the product, similar

products and substitutes within the target marketsegments in the target market areas?

5. What will be the supply of similar products andsubstitutes within the target market segments from thetarget market areas?

6. What are the strategies of the competitors who supplyto your chosen target market segments and targetmarket areas in terms of product, price, place andpromotion?

7. What will be your strategies to supply to your chosentarget market segments and target market areas interms of product, price, place and promotion?

8. What will be the selling price and how much will be

sold?9. What fixed assets will be required for marketing and


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how much will they cost? What will be the life of theassets and how will they be depreciated?

10. How much of expenditure will be incurred in terms ofmarketing, including cost of marketing personnel?


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7. Product Development

Product decisionsThe product or service is the offer that the marketer makes to buyers and it is of centralimportance in the marketing effort. A product may be defined as a bundle of physical and

psychological satisfactions that a buyer receives from a purchase. It includes not only thetangible object, but also such supportive elements as packaging, convenience of purchase,post-sale services and others that buyers value.

Branding and packagingA product should be given a unique brand name to distinguish it from other goods offered tobuyers. The name should be distinctive and easy to pronounce, and it should capture theessential product idea. The name should be registered as a legal trade mark, thus protecting itfrom use by competitors. It is a fact that many African manufacturers do not bother to put anybrand names on their products, and some unscrupulous ones assign names that sound almostidentical to the names of well-known successful products. These suggest lack of confidence inthe product's quality by the producer. In any case, a producer who is marketing a successful but

nameless product is making a grave error that should quickly be corrected.

Packaging has the basic function of protecting the product, hence the package must be durableenough to survive handling during distribution. It should be aesthetically pleasing and be distinctenough to stand out when placed side by side with competitors' brands on the retail shelf. Itshould also be convenient to handle by consumers (consider the convenience of the aerosolspray can that revolutionised the packaging of certain liquid products). The package label, apartfrom providing certain kinds of information that may be required by law such as net weight,volume and ingredients, may be used by the producer to promote the product if a well-designedpromotional message is inscribed on it.

Building the product mixThe product mix is the composition of products being marketed at any point in time by acompany. When products are closely related, especially with regard to end use, they constitutea product line. An example of a product line is a phonograph turntable, a stereo amplifier,speakers and a voltage stabiliser (for Africa). A product line may be narrow (that is limited) orbroad depending on whether the associated products are few or many. Two of the commonways to build up a product line are:

by adding differentiated features to a basic product design in order to appeal todifferent market segments (market segmentation strategy); and

by adding products that are complementary, meaning used together. Sometimes amanufacturer will market brands of a product that are virtually identical except forbrand name and packaging, although advertising will claim unique differences.This strategy is called multi-branding and is commonly observed in consumer

packaged goods industries such as toilet soap and detergents.

The manufacturer's objective is to improve his competitive position by securing larger shelfspace in retail stores and thereby taking sales away from other producers' brands.

Proper management of an existing product mix includes knowing when to modify products ordelete those faring badly in the market-place. Sales figures and consumer research provide thenecessary information for the decisions.

Product innovationA 'new' product is one that is new to a company, but not necessarily new to the market wherethe generic product may already exist. The management of a true product innovation (that is, aproduct new to the market) follows six main stages which we simply outline here.

Idea generation: product ideas may come from many sources - company,salesmen, customers, competitors.


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Idea screening: selecting the most viable ideas to exploit. Business analysis: analysis of sales, costs and profit projections. Product development: building and testing prototypes, etc. Test marketing: placing product samples in actual retail stores to test consumer

acceptance. Commercialisation: full-scale marketing on a national basis.

8. Pricing decisions - Factors that influence price setting

Setting base priceThe base price is the price that the producer receives at the factory gate; it does not include anymark-ups or allowances to compensate middlemen for distributing the product. The mostimportant method of setting a base price is the full cost method. The rationale for full-costpricing is that all products should bear their full share of costs. Any product's price, therefore,must cover all allocated costs plus a 'reasonable' profit mark-up or margin. The formula for full-

cost pricing is: Price = ATC(1 + M) where ATC is average total cost per unit of the product, andM is the profit mark-up percentage.

Pricing in the distribution channelWe must now consider how the 'ex factory' price is translated down the distribution channel (i.e.through wholesalers and retailers) to the consumer. Suppose the producer has not suggestedwhat the retail price should be and merely asks the distributors or wholesalers to pay hisproducer price per item. To cover their costs and provide for profit, the distributors will add theirprofit mark-up percentage or margin to their cost before selling to retailers; and the retailers inturn will add their own mark-up before selling to the final buyer. Thus, a chain of mark-ups existsin the channel of distribution. Each middleman uses a pricing formula identical to the mentionedequation, where ATC represents his unit cost of the product. In some cases the producer mayrecommend a retail price for his product and then allow middlemen discounts based on that

retail price. This type of discount is called a trade or functional discount; it covers themiddleman's operating costs and profits and represents his inducement or rebate for performingimportant functions in the distribution channel. For example, suppose the recommended pricefor a standard- sized can of paint is 1 110 $ per unit, granting a discount of twenty-five per centmeans that the manufacturer bills the distributor for 1 110 $ (1 - 0.25) or 117.50 $. Thus, if thedistributor gets a shipment of 100 cans, the invoice is for 11 750 $.

9. Channels of Distribution and Logistics

The task of distribution is to make the goods physically available to buyers. A distributionchannel is defined as the combination of institutions through which a producer markets his

products to the ultimate buyer. By institutions we mean middlemen such as wholesalers, distri-butors, retailers and agents. These middlemen perform important functions such as contactingcurrent and potential buyers of the product, inventory ownership and risk bearing (that is, takingtitle to goods before they are sold), various kinds of sorting and handling of the product, storageand transportation, extending credit or financing (of their customers) and providing the producerwith information about their local market.

Selecting distribution channelsA producer can distribute his product through a variety of channels. If the producer decides tosell directly to consumers, he uses a direct channel. This may take the form of having salespeople going from door to door to peddle the product, or it may mean that the producerestablishes a network of wholly-owned retail outlets.

Five sets of factors affect channel selection:


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1. The market coverage desired by the producer, e.g. to cover an extensive marketarea will need the use of indirect channels for intensive distribution.

2. The degree of channel control desired, e.g. to ensure proper presentation of theproduct to consumers, the producer uses direct channels by eliminating allmiddlemen.

3. Product characteristics, e.g. a bulky product like coal may use direct channels to

minimise handling.4. Market characteristics, e.g. frequent and/or impulse purchase by buyers wouldsuggest the use of intensive distribution, every available channel is used.

5. Manufacturer characteristics, e.g. only a manufacturer with adequate financingcan own its retail outlets, if such direct distribution is called for.

Selecting and motivating distributorsHaving selected the types of channels to employ, the producer has to pick particular middlemenor distributors. He uses such selection criteria as the credit-worthiness of the distributor, hisselling ability, inventory and storage space and his personal qualities. The producer may adopta variety of measures to build enthusiasm and excitement among the revellers, such asproviding sales training for distributor personnel, providing useful tips on purchasing and stockcontrol and supplying sales promotion aids such as printed material on the products and point of

purchase and showroom displays. Proper management of distributors includes a periodicevaluation of each distributor's sales performance in relation to previous periods or otherdistributors, and ensuring that he moves adequate volume of inventory on the full product lineoffered by the producer.

Physical distribution or logisticsPhysical distribution or logistics is concerned with the efficient movement of raw materials fromsuppliers to the production line, and of finished goods from the end of the production line to thecustomers. A number of associated activities must be performed and these may be groupedunder the four main categories of:

1. transport;2. inventory;3. warehousing (including materials handling); and

4. communication.

A wide variety of transportation modes is available to move goods - rail, highway, water,pipeline and air, each with different cost and service (speed) characteristics. Decisions must bemade regarding the mode of transportation to use for each type of shipment. Inventory is ofcentral importance in distribution system design. Since the cost of carrying inventory is high,procedures for proper management of inventory must be installed. Warehouses (or depots)store inventories. Decisions must be made as to how many warehouses are required, wherethey should be located and what products should be stocked in what quantities. Materialshandling involves the movement of goods within the plants and warehouses. Suitableequipment (such as fork-lift trucks, conveyors, pallets) must be available to permit economichandling of goods. Finally, there must be good communication flow in order to co-ordinate allthe logistics activities effectively. For example, a good communications system should be able

to make available on demand the present stock position of each item at each stock location.

10. The Promotional Programme

Advertising is defined as any form of non-personal communication through the mass media thatis paid for by an identified sponsor. Along with sales promotion, personal selling, publicity andpublic relations it forms the promotional or communications programme of the marketer. Salespromotion is any activity that is used to stimulate sales of a product or service usually occurringonce or over a limited period of time. Examples are 'sales' conducted by retail stores at festivalperiods such as Christmas, the giving away of free samples of the product, and price reductionson goods.


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Personal selling refers to the use of salesmen to push the product or service. The sales forcemust be selected, trained, motivated (especially through a good compensation plan) andcontrolled for effective performance.

Publicity is information about a company and its products that is conveyed to the public by themass media because such information is newsworthy and the company pays nothing for it.

Public relations efforts of the marketer are concerned with building and maintaining goodrelations with special publics such as customers and the public at large. And such image-building may use advertising as a tool.

The various components of the promotional programme are not used in isolation. For example,although advertising may be most suitable for one purpose and personal selling for another, thetwo are often employed simultaneously, the relative emphasis depending upon circumstances.Further, advertising may be used to announce a sales promotion activity.

11. Advertising

Importance of AdvertisingAdvertising is a young industry in Africa. Since many products are relatively scarce in thecountry, the typical producer is able to dispose of his output without much promotional effort.With the exception of consumer products companies - especially cosmetics and toiletriesmanufacturers - African marketers do not spend much on advertising and some do not advertiseat all. Yet the trend is changing as more and more companies are realising that advertising canbe a positive force in their marketing as competition increases. An indicator of the growingimportance of advertising is the rapid growth in Africa of the number of advertising agencies.

There are two basic objectives of advertising, namely: to inform the target audience about the product or service; to create or stimulate demand for the product or service through persuasion.

These translate ultimately into sales of the product, but in planning a specific advertisingcampaign the marketer may choose a more concrete goal such as 'to increase consumerawareness of the product by thirty per cent'.

The key advertising decisions are: setting the advertising budget; creating advertising copy; and selecting media and vehicles and allocating from the budget to them.

The advertising budgetmay be based on a percentage of sales or it may be keyed to a levelcomparable to what the competitors are spending. Advertising copy is defined as the words andpicture or illustration that make up the advertisement and the way they are laid out to create atotal impression. Through the copy the advertiser says what he wants to say (called the theme

or message) in the way he wants to say it. Various advertising media are available such asradio, newspapers magazines, television, outdoor advertising and cinema films. Radio iscurrently the most popular medium in Africa, but each medium has its advantages in reachingparticular types of target audiences. After selecting the suitable media, the next job is to decidehow much time or space to purchase in each vehicle (e.g. daily advertisements of ten or twelvelines in the newspaper medium) and how these insertions will be spread over the time periodcovered by the advertising campaign. This is called media scheduling.

In planning and executing his advertising programme, the advertiser relies heavily on theservices of his chosen advertising agency. The advertising agency advises clients onadvertising strategy, creates advertising copy, supervises advertising production and buysmedia time and space. The larger agencies provide many other services, such as advising onmarketing planning and sales promotion, designing and producing brochures and point-of-saledisplays, advising on publicity and public relations and conducting marketing research.


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Advertising ChannelsIn the good old days, it was widely believed that supply created its own demand and as a result,many enterprises did not see marketing (in its various forms) as an important set of activities.The story is different now. It is indeed so different that without marketing, a business couldhardly stay competitive. It is anticipated that in the near future, enterprises would have toundertake a lot of marketing activities to maintain their market share.

There are many marketing channels open to small enterprises, each presenting a different levelof opportunity and cost, etc. Many enterprises have used a combination of these channels asradio advertising slots, flyers, business cards, directional signs, newspaper advertising,personal selling, sales promotion, after sales service and shop designs.

Each of these options is useful either when used alone or in combination with other options,depending on the product, target market and the objective of the use of the option. Each ofthese options also comes with cost implications which should be weighed against theenterprises cash flow situation and the expected response from the target market. It is alwaysadvisable to be less optimistic about the expected results from use of any or a combination ofthese options.

Radio Advertising is used quite extensively by the large and medium enterprises and to alimited extent the upper small enterprises. It is a powerful marketing channel that has thepotential of bringing good returns on the investment made. There are however someprecautions that need to be exercised by enterprises wanting to use this channel.

In the first place, it is true that an increasingly large proportion of the population of Ghana dolisten to radio for various purposes such as news, music, information on products, services, etc.It is also true that there are close to 20 radio stations in Accra/Tema alone and thisphenomenon presents the question of who listens to which radio station at what time. It is onlywhen this question is accurately answered that advertising via radio could yield potentialbenefits. There are testimonies of enterprises that have used radio advertising to grow theirbusinesses from micro through small to relatively large enterprises. There are others that nodoubt have been impoverished for using the same channel of marketing.

For one thing, it costs quite a bit of money to undertake a sustained marketing campaign onradio which could achieve the desired impact on the target market. Thus if this investment doesnot yield the expected impact, the enterprises cash flow could be unduly encumbered.

The experts advise that a radio campaign that has yielded good results for the typical smallenterprise has taken about six weeks of three slots a week on at least two radio stations. Thishas a huge cost implication for the small enterprise.

FlyersThe use of flyers is catching up with small enterprises in Ghana. This channel of advertising isused mostly when a new product/enterprise is being launched. It is a relatively cheap form of

advertising but its impact is often not assured as the proportion of the reading public is not largeenough. To be successful, it has to be targeted in terms of timing and audience. Some of thesuccessful flyers have been sent to restaurants and bus stops where the target marketgenerally has some time to spare. It could also be useful in heavy traffic. This option though isnot recommended.

Directional SignsDirectional signs are widely used by both small and medium enterprises. It is not as costly asthe other channels of marketing and its effects are longer lasting. It is however the case thatmost small enterprises do not use enough of these directional signs and therefore do not benefitfully from the use of this channel of marketing. Thus in a situation where only two directionalsigns are placed, potential customers are unable to easily locate the enterprises place ofbusiness.


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