MARKETING NOTES

Marketing is a management process responsible for identifying, anticipating and satisfying customer requirements profitably. It is a process of researching
into consumer needs and applying suitable price, product, distribution and promotion strategies in order to satisfy consumer needs profitably. The marketing
function of an organisation aims to link the business to the consumers and aims to get the right product at the right price to the right place to the right
consumers. The first stage of marketing is to discover consumer current and future needs then respond to those needs by providing a suitable product

Definition of key terms

(a)Market – is a group of customers with similar needs and wants which a business can target and satisfy by providing the needs of such customers.
(b)Market place – is a location where buyers and sellers meet for the purpose of trade. It is a place /site which makes trade possible.
(c) Market size – is the total sales of all organisations in an industry over a given period of time. It is also the total number of customers in an industry at a given
period of time.
(d)Market share – is the proportion of a firm’s sales to the total sales in the industry at a period of time. Firms aim to have higher market shares in order to have
more profits. It is also the individual firm’s number of customers in relation to total customers in that industry.
(e) Market growth- is the increase in the size of the whole market in terms of sales value or volume.
There are two types of markets which are industrial markets and Consumer markets.
Industrial markets- markets for products used for the production processes that is for the production of other goods.
Consumer markets – are markets for the end users of the product/ultimate users.
Importance of marketing
 Helps organisations to identify consumer needs and provide products to meet those needs.
 Informs and educate customers about the firms products.
 Helps the organisation to understand the marketing environment and competitor activities which is important to business plans.
 The dynamic technological environment which has resulted in products having short life cycles has necessitated effective marketing strategies for
businesses to survive and remain profitable.
 Reduces chances of new product failure.
Marketing objectives
The following are marketing objectives of a business
 To Increase market share
 To Increase sales and profits
 Increasing brand awareness
 To satisfy customer needs
 Development of new markets to spread risks
Alternative approaches to marketing
(a) Production approach/Production concept
Production oriented firms concentrate on efficient low cost methods of production in order to sell goods at low prices in the expectation that customers will buy
them provided there are cheap. These firms strive for productive efficiency rather than responding to customer needs and can be beneficial when producing
homogeneous products and basic goods.
(b) Product approach/ Product concept
These firms assumes that the supplier knows best thereby producing unique high quality goods and expect customers to buy them. These firms have the belief
that customers will buy high quality products if made available.
(c) Sales approach /Sales concept
These firms focuses on the skills of selling and use aggressive selling and promotional techniques to sell their goods. The firm makes a product and then
considers how customers can be persuaded to buy the product.
Marketing oriented firms starts with the needs of the customers and marketing has become very important in the modern day world where there are fast
changing and volatile markets.
Differences between marketing and selling
Marketing Selling
 Firms first identify customer needs and work on how to satisfy  Firms produce products and focus on how to sell them.
those needs. Emphasise on customer needs Emphasise on product sales.
 Profit oriented  Sales volume oriented
 Panning is usually long term from product development.  Planning is usually short term and is about on how to sell the
products at hand.

Marketing strategy
Marketing strategy is a coordinated plan of action to identify and satisfy customer demand thereby achieving organisational objectives. It lays down long term
objectives and targets for the marketing personnel to follow. The components of a marketing strategy includes the following
 Market research
 Product planning and development
 Pricing
 Distribution
 Promotion
An organisation should have a proper marketing strategy to achieve its marketing goals. In coming up with the marketing strategy the business needs
information about the marketing environment as shown below.

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Controllable variables- these are variables which an organisation can alter to achieve a desired marketing mix. The variables are the 4Ps (product, price, place
and product.
Uncontrollable variables – are variables which an organisation cannot alter and are the elements of the external environment (PESTEL).
Marketing plan – is a detailed report of an organisation’s marketing strategy.
Marketing tactics
These are tools and techniques used by the marketing department to achieve its objectives. Advertising, sales promotion etc are tactics used which are within
the overall strategy.
The product life cycle
The product life cycle shows the stages which the product goes through from launch to elimination. It is a concept which says that a product goes through
different stages until it is finally withdrawn from the market. The sales of the product increase first at a lower rate then rapidly as well as net cash flow then later
both decline as shown below.

The features of each stage/ phase can be identified as follows

(a) Product development phase
This phase involves carrying out research and development of the product and preparation of the marketing plan prior to launch. High research and
development cost are incurred.
(b) Launch /introductory phase
The product is introduced into the market and sales volumes are low.
 Heavy promotional spending is done to create product awareness. The product is purchased by innovators.
 There is growth in sales revenue but unit production cost is high and the product is unlikely to be profitable at this stage.
(c) Growth phase
Profits grow as sales rise and unit cost fall rapidly. The product penetrates the market as it is bought by early adopters. The firm tries to build customer loyalty
before competitors enter the market. A higher volume of sales enables a firm to benefit from economies of scale.
(d) Maturity
Sales continue to rise but at a slower rate. The product is now bought by majority and brand preference is very important in this phase for continuing success.
Competitors enter the market with similar products. Packaging is also important in the marketing effort and the firm aims to capture sales of weaker rivals.
(e) Saturation
This is an extension of the maturity phase where sales level off. Most people would have bought the product
(f) Decline phase
Sales and profits decline, substitutes appear as the product become obsolete. The firm seeks to cut its losses by either cutting costs or elimination of the
product. The product is purchased by laggards.
Elimination
The firm has to assess wether the decline is reversible or irreversible.
Reversible / temporary decline- is when sales can be rejuvenated by an adjustment in the marketing mix. Product extension strategies are used to prolong the
product’s life.
Product life cycle Extension strategies
 Modification of the marketing mix (price, promotion, distribution)
 Modification of the product, improved quality, new features etc.
 Encouragement of increased usage- new and more varied uses.
 Expansion of the number of brand users and enter new segments.
Irreversible decline – this is when it has been assessed that no adjustments can be done successfully to rejuvenate the sales of a product. The product in this
case will be dropped when it is no longer profitable to continue producing and selling it.

TABLE FROM STIMPSON ON PRODUCT LIFE CYCLE STAGES. 274

Importance of the product life cycle

1. The product life cycle helps managers to know marketing mix decisions at different stages of the product life cycle.
 Need for heavy promotional spending on introduction and use of informative advertising, persuasive advertising at maturity and saturation and
defensive advertising at decline stage.
 Pricing- penetration or skimming at launch phase, the frim can also reduce price at saturation and decline phases.
 Distribution – selective distribution at launch , intensive distribution at growth and maturity.
2. Provides the basis for new product development and is important in product portfolio management planning and control. It facilitates Product positioning and
market targeting
3. Helps the business to know when to withdraw.
4. Helps managers to assess the profitability of the product at different stages and over its useful life.
Limitations of the product life cycle
1. Not all products follow all the stages as shown on the product life cycle , the shape of the product life cycle may be different from one product to another eg
from technical products to consumer and industrial goods.
2. Sales of a product may differ and can be influenced by different factors.
3. Some products never reach the decline phase

MARKETING RESEARCH
Is the systematic and objective collection, analysis and evaluation of the information relating to markets and marketing. Marketing research is not just the
collection of data but involves analysis and evaluation of the information which will contribute to the quality decision making in the organisation. Marketing

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research is broader than market research and includes research into the effectiveness of the marketing strategy. It is the first stage in marketing of successful
products concerned with identifying customer requirements through collecting and analysing relevant information.
Importance of marketing research
Businesses should conduct marketing research on regular basis because of the dynamic nature of the markets. Marketing research is needed for the following
reasons.
1. To assess risks of new product failure.
2. To predict future changes in demand of products and explore new possibilities.
3. To explain patterns in sales of existing products and market trends.
4. To assess the most favoured designs, flavours, styles, promotions and packages for a product.
5. To help in decision making related to marketing issues. This also improve public relations.
Marketing research can be divided into the following elements.
(a) Market research- research about the size of a market, geography of the market, customer profile, future potential markets, customer behaviour and market
segments.
(b) Product research – involves evaluation of weaknesses and strengths of existing products. Investigating new uses of existing products. Packaging
research ,product development and pricing policies research.
(c) sales research –examination of selling activities, sales methods, analysing distribution systems and identification of suitable outlets.
(d) Promotion research – analysis of the effectiveness of promotional activities and media research.
(e) competitor research – research into activities of the competitors.
(f) Business economics research – research into the macro and micro economic environment.
Marketing research has become increasingly important in the modern business because of the following
 The accelerating pace of technology has resulted in rapid changes in the market trends were products have shorter product life cycles.
 The high costs of new product development requires relevant information.
 Increased uncertainties and increased competition due to globalisation.
Types of research
There are two types of research which are secondary and primary research.
Secondary research/ Desk research
Is the evaluation and analysis of information that already exist pertaining markets and marketing. It is the collection of data from second hand sources and the
data would have been collected by another organisation or person for a different purpose. There are two main sources of secondary data for research which are
internal and external.
Internal sources -Data is found within the organisation such as internal company records , stock movements and sales trends and is readily available.
External sources – Information is found outside the organisation eg from government publications, newspapers, libraries, internet etc. The following are
secondary sources of data.
1.Government publications –such as population census, Social Trends, Annual Abstract of Statistics, Family Expenditure Survey.
2. Local libraries and local government offices
3. Newspaper reports and specialist publications as well as magazines
4. Internal company records -If the business has been trading for some time, a large quantity of secondary data will already be available for further analysis from
 customer sales records
 guarantee claims from customers, clients databases,
 daily, weekly and monthly sales trends
 Feedback from customers on product, service, delivery and quality.
5. The internet - secondary data can be obtained from the internet however whenever secondary research is conducted just from the internet, the accuracy and
relevance of the source should always be checked upon.
Information collected through secondary research should not be accepted unquestioned and the following aspects should be investigated
(a) Character of the collecting organisation- In some cases data may have been collected to prove something and may be biased eg information from political
pressure groups.
(b) The objectives of the original study – if these are not the same as those in hand data may not be suitably classified.
(c) Methods used to collect data-if sample selections and data collection were badly done data will be inaccurate.
(d) Timeliness – the data may have become out of date.
Advantages of secondary research
1. It is cheap to obtain the information research costs are low. Only market research intelligence reports are expensive
2. It is quick to obtain the data as it does not involve long research processes as in primary research.
3. Identifies the nature of the market and assists with the planning of primary research.
4. Allows comparison of data from different sources and important competitor information obtained.
5. Nature of the market can be assessed quickly and essential information about market size and growth obtained.
Disadvantages of secondary research
1. Data could be outdated and also coverage may be inappropriate.
2. The data obtained may not suite the objectives of the company as it may have been collected for a different purpose.
3. The way the different organisations conduct the research may be unknown and their data collection methods used may be inaccurate.
4. Secondary data may not be available for new markets and for the development of new products.
5. There can be problems of interpretation.
6. There is little control over quality of information.
Primary research
Involves the collection and analysis of first hand data which does not exist and has to be collected by the researcher. It is also known as field research and the
data is collected from the market directly. The research can be carried out by the organisation itself or research agency on behalf of the organisation. Secondary
data can help in the planning process of gathering primary data.
Quantitative and qualitative research
Quantitative research – research used to obtain quantifiable data which can be expressed numerically eg research on sales volumes, market share. Relates to
how much customers buy.
Qualitative research – research into opinions, motives and attitudes behind consumer behaviour. Relates on why customers behave in a certain way or buy a
product.
Primary research methods
(a) Focus groups – consist of a group of 15-20 people who are asked about their attitudes towards a product and are encouraged to freely express their views
and opinions on a selected subject such as new style of packaging ,taste and design. In these discussion groups, questions are asked and the group are
encouraged to actively discuss their responses about a product. The technique is used to determine both overt and subconscious attitudes and motivations. All

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members of the group are free to talk with others in the group and the group will contain people from the same market segment. Once the group is interviewed
it will not be interviewed again. Information is often believed to be more accurate and realistic than the responses to individual
interviews or questionnaires, where respondents do not have an opportunity to conduct discussions. There might however be the risk of researchers leading or
influencing the discussion too much, leading to biased conclusions. And it is costly and time consuming as well.
(b) Consumer panel – is like a focus group but the difference between the two is that in the consumer panel the same group of people is interviewed regularly
about the product and for any changes made to the product. It is more accurate to interview the same group of people as it help to assess how consumer
thoughts and perception about the product has changed which is an advantage over focus group.
(c) Observations – researchers can observe the actions and reactions of customers for a given product eg in a shop and make conclusions on them . This method
however has a limitation that the researcher can make wrong conclusions about the customer actions ,also if customers knows that they are being observed as
they may behave in a different way which may give biased results. It is used to observe stock movements (audits) and can be done through cameras in a shop
were researcher can be employed to watch the behaviour of customers in a shop. Observations are expensive and provides limited information.
(d) Experimental methods
Experiments are used to test and assess the response of consumers to changes in the marketing mix such as a change in the product ,package, price ,distribution
arrangements etc.
(1)Test marketing - It involves a limited launch of a product to a selected geographical area to test reaction of consumers both to the product and the way it is
marketed. This takes place after a decision has been made to produce a limited quantity of a new product but before a full-scale, national launch is made. The
results are used to determine whether launch the product on a large scale or not, It also reduces the risks of a new product launch failing completely and also
reduces marketing costs, but the evidence is not always completely accurate if the total population does not share the same characteristics and preferences as
the region selected.
(2) Laboratory test method – is when members of the target population are invited to a particular artificial setting and asked to test the product or try it at their
own places.
(e) Consumer surveys
A survey is an examination of a part of the population and can be used to investigate customer opinions. This can be done through telephone surveys, mail
surveys , postal surveys and personal interviews. Surveys involve directly asking consumers or potential consumers for their opinions and preferences. The
advantage surveys is that it is flexible ,yields a wide range of data and generates customer opinions. Questionnaire are commonly used in surveys where people
are given questionnaires to complete which have open and closed questions. They can be used to obtain both qualitative and quantitative research information.
. There are four important issues for market researchers to consider when conducting consumer surveys which are :
 Who to ask? In most cases it is impossible or too expensive to survey all potential members of a target market (the survey population). A ‘sample’
from this population is therefore necessary.
 What to ask? The construction of an unbiased and unambiguous questionnaire is essential if the survey is to obtain useful results.
 How to ask? Should the questionnaire be self-completed and returned by post or filled in by an interviewer in a face-to-face session with the
respondent? Could a telephone or internet survey be conducted instead?
 How accurate is it? Assessing the likely accuracy and validity of the results is a crucial element of market research surveys.
Advantages of primary research
1. It is up to date therefore more useful than secondary research.
2. It is relevant as it is collected for a specific purpose, it directly addresses the questions the business wants answers to.
3. It is confidential – no other business has access to this data.

Disadvantages of primary research

1. Costly – market research agencies can charge thousands of dollars for detailed customer surveys and other market research reports.
2. It is time consuming as compared to secondary data which could be obtained from the internet much more quickly.
3. The accuracy of information is affected by the use of sampling
SAMPLING IN MARKET RESEARCH
A survey of the whole population is called a census. It is usually impossible to examine the whole population because it is costly and time consuming.
Organisations use sampling where a part of the population is examined. A sample is group of people taking part in a market research survey selected to be
representative of the overall target market . Sample size is the number of people selected form the population to be examined representing the whole
population. Generally the larger the sample size the more accurate the results can be. A sample frame is a complete list of all items in a population ,this list must
be updated regularly to be useful in sampling. Sampling has advantages which are , is cheaper as it requires fewer resources than an examination of the whole
population and it is also saves time and results can be reliable as there is concentration on fewer units.
Sampling methods
1.Simple Random sampling
Each member of the target population has an equal chance of being included in the sample eg pulling names from a hat. To select a random sample the
following are needed:
 A sample frame –a list of all of the people in the target population
 sequential numbers given to each member of this population and a list of random numbers generated by computer.
If a sample of 100 is required, then the first 100 numbers on the random number list are taken and the people who had these numbers allocated to them will
form the sample – but it may take time to contact these specific people.
Systematic sampling method
Involves choosing the starting point then selecting every nth term eg selecting every 10 th household in a location. The sample interval will be the same for the
selection of every item. It requires a complete sample frame. It has a limitation that the pattern of items selected can coincide with
2.Stratified sampling
This method recognises that the target population may be made up of many different groups with many different opinions. These groups are called strata or
layers of the population and for a sample to be accurate it should contain members of all of these strata – hence the term, stratified sampling. If you were asked
to sample 100 students in a school about soft drink preferences for the school shop, it would be more accurate if, instead of asking 100 friends, you split the
school up into certain strata, such as class groups, ages or gender.
3.Cluster sampling
When a full sampling frame list is not available or the target population is too geographically dispersed, then cluster sampling will take a sample from just one or
a few groups – not the whole population. This might be just one town or region and this will help to reduce costs but it may not be fully representative of the
whole population. Random methods can then be used to select the sample from this group.
4.Quota sampling
The population is first segmented into mutually exclusive sub-groups/ subsets in a variety of respects eg based on gender, income, occupation etc, Then the
interviewer or researcher uses his or her judgement to select people from each segment based on a specified proportion; for example, an interviewer may be
told to sample 200 females and 300 males between the ages of 45 and 60 years. In quota sampling the selection of the sample is non-scientific and may
therefore be biased. The main weakness of quota sampling is that not everyone gets a chance of selection.

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Each method of sampling has its own advantages and limitations .The method to be selected depends on the size and financial resources of the business and
how ‘different’ consumers are in their tastes between different age groups and so on. cost-effectiveness is important in all market research decisions.
FORECASTING
Fore casting is the attempt to predict the future behaviour of a variable and provides the basis for planning. Forecasting is used in
 planning production schedules
 manpower planning
 investment appraisal
 cost projections and inventory control
 market testing
For decisions relating to the above it is important to have a forecast of future trends in order to come up with an effective strategy and planning.
Forecasting techniques are broadly divided into two groups which are qualitative/judgemental techniques and quantitative techniques.
Qualitative techniques
These techniques depends on human judgement and experience and are used when
 data is scarce or unavailable
 the time frame is so long that data is of limited use
By means of these techniques qualitative information is turned into quantitative estimates. The main qualitative techniques used are
(a)Personal insights- individual forecasts based on human judgement. There are cheap but the level of accuracy can be low.
(b)Panel consensus – a panel of experts discuss issues to arrive to a consensus forecast. Accuracy is higher than personal insights as it involves pooling of
knowledge.
(c) Market surveys
(d)Historical analogy-The performance of one product provides an analogy to predict trends of similar product in future.
(e) Delphi method- involves a panel of experts responding to questions unlike panel consensus the experts are asked independently and the responses of each
experts are presented to other experts anonymously until a consensus emerges, this increases the accuracy of the forecast. This method is however costly
Quantitative techniques
(a) Casual methods – involves the use of mathematical models to link cause and effect eg relationship between price and demand of a product. By establishing
the statistical relationship between the dependent and independent variables such as sales and advertising expenditure it is possible to forecast trends in one
variable from movements in another variable.
(b) Time series analysis- A time series is a set of data recorded over uniform time periods such as a month or year which shows how the variable has behaved
over time. The analysis of time series involves decomposing the data to establish a pattern, if the pattern is shown to exist then there is a basis for predicting
trends into the future. A trend is a long-term movement of a variable and can have fluctuations/variations which are
 seasonal- associated with seasons
 cyclical –booms and slumps causes cyclical fluctuations occur in medium term eg 5years.
 Random variations- occur as a result of major disturbances such as war or substantial rise in disposable income.
(c) Moving averages – A moving average is the one which is updated as new information is received eg inflation rate which is an average price rise over the last
12 months . At each successive updating one moth is dropped and replaced by the latest month. Moving averages also help in forecasting the future trend of a
variable.
Limitations of moving averages
a. It gives equal weight to all values however it is argued that recent data is more relevant and should be given more weight.
b. Does not take into account data outside the period of the average
c. Requires more data and is complicated to use if there is more items in stock.
Extrapolation
Extrapolation is the process of projecting the trend line into the future and is done in Time series analysis and moving averages when forecasting the future
trend of a variable.

MARKET SEGMENTATION
Market segmentation is the subdivision of a large heterogeneous market into small homogeneous sub markets where each sub market can be realised by a
distinct marketing effort. It is the subdividing of a large undefined market into smaller group consumers know as market segments with similar spending
pattern. A market segment is a sub-group of a whole market in which consumers have similar characteristics eg in terms of age ,income levels etc.
Segmentation is important because the market is undefined and consist of different consumers with different buying patterns and characteristics and can be
better served by grouping customers into distinct groups.
Ways of segmenting a market

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