PRINCIPLES OF MARKETING

Marketing- is the promotion of Business products or services to a target audience.

E.g.-television commercials, billboards on the side of the road and magazinesadverts.
Marketer-one that promotes or sells products or services.
According to Phillip Kotler
Marketing-is the science and act of exploring, creating and delivering value to satisfy the needs of a
target market at a profit.
Marketing- refers to activities a company undertake to promote the buying or selling of a product or
services.
It includes; Advertising, selling and delivering products to consumers or other businesses.Marketing is
done by affiliates on behalf of a company.
Terms used in Marketing
Market – is a place where two or more parties can gather to facilitate the exchange of goods and
services. Parties involved are usually buyers and sellers.
- A set up where two or more parties engage in exchange of goods, services and information.
Need- is a consumer desire that is necessary in a healthy life.
E.g., air,water,food,safety,shelter,belonging.
Want-is the desire for products or services that are not necessities, but which consumers wish for. They
are luxury items not necessities.
Demands – are requests for specific products that the buyer is willing to and able to pay for.
It is being influenced by the price.
When demand is high price is high.
Products – anything that can be offered to a market that might satisfy a want or need.e.g., shoes,tv,
laptop etc.
Exchange- act of obtaining a desired product from someone by offering something in return.
Satisfaction-occurs when a product conforms a customer’s needs.

IMPORTANCE OF MARKETING
1.Enables people to consume products that they could not therefore make accessibility to.Products
which have enhanced close border trade and the international fields.
2.Raises the standard of living of people- through it, consumers get to know how certain products are
used.
3. creates employment opportunities i.e., many people earn their living by performing market activities
such as the sales people, distributers and promoters.
4. Through marketing, goods and services find their way into their trading blocks.
5. Converts yesterday luxuries into today’s necessities.
6. Source of income and revenue – provide many opportunities to earn profit in the process of buying
and selling the goods by creating time, place and possession utilities.
7. Marketing makes one a better-informed customer.
8. Creates awareness of the product into the market.

DUTIES OF MARKETING MANAGER

1.Researching and analyzing market trends and competitors
2. Negotiating and liaising with third party marketing agencies.
3. Looking after budget to ensure marketing department delivers a return on investment as budgeted.
4. Selection and placement of salesmen.
5. Training the salesmen.
6. Controlling activities of the employees.
7. Working with the executive team i.e., marketing director, to set marketing strategy for business.
8. Managing performance of employees.
9. Overseeing marketing campaignse.g.,advertisement.

MARKETING PHILOSOPHIES/CONCEPTS/ORIENTATION
Are the strategies used by the business to guide their market efforts.
Areguides a business uses to identify and fulfil the needs of the customers, benefiting both the
customerand the company.
There are five marketing concepts. A company should choose the right one according to their
customer’s needs.
1.production concept
2. product concept
3. selling concept
4. marketing concept
5. societal marketing concept
1. Production concept.
Concerns with the large volume of production and doesn’t factor in the quality of the products.
The idea that consumers will favor products that are available and highly affordable therefore the
organization should therefore focus on improving production and distribution efficiency.
Features.
 Poor qualities
done by monopolistic company
 Low prices
 No Consideration of customer’s preference
Advantages. Disadvantage.
 Easily available poor quality of a product
 Low pricesNo consideration of customer’s needs
 Wide market

2. Product concept.
This concept assumes that consumers prefer products of high quality.Performance and product features
are considered. The organization therefore should focus on its energy to make continues product
improvements.
prices are higher.
Most organization spend time in producing high quality products to their customers.
sometimes customers are involved in product design.
The marketers in this concept takes into consideration quality, needs and wants to satisfy customers.
There is proper guideline in use of products.
There is always after sales services.
Customers are well off financially.
e.g., Apple products, I phone, Apple watch, tv
Disadvantages.
It is expensive
Production cost is high due to high quality
Market sometimes is low
Cost of advertising /promotion is high
3. selling concept -believes in promotion of products.
Focuses on the idea that consumers will not buy enough of the firm’sproduct, unless it undertakes
selling and promotion efforts.
Focuses on making every sale of the product regardless of quality of the product.
Its main focus is to make money.
Doesn’t include building relationship with customer thus repeated sales are very low.
Companies following this concept may even try to deceive the customers to make thembuy their
products.
E.g., saccos, insurance, hawkers and new products
Customers may buy products they don’t need.
Some/they don’t last long in the market.
They have little information about their customers.Here the concept shifts from production of the
product to simply selling the product. Even if the goods meet the price and quality requirements of the
consumer, the sale is not guaranteed. In the selling concept of marketing management philosophies, the
idea is to persuade the consumer to buy the product by any means necessary.
Companies use promotion, advertising and publicity to convince the consumer to buy their products. At
times they can even manipulate consumers. The ultimate aim here is to push the product, without
thought of long-term consequences.
4. Marketing concept -Employ marketers to do marketing
This concept works on assumption that consumers buy products which fulfil their needs.
Business/companies following the marketing concept conduct research to know about the customer’s
needs and wants that come out with products that fulfil the same need.
By doing so, the business establishes the relationship with the customers and generate profits in the
long run.
Examples.
Companies in perfect competition- no barrier to entry or exit, companies sell identical products.
Companies who want to stay in market for long i.e., Safaricom.
Disadvantages.
Uses a lot of money in advertising.
Expensive- do a lot of research which is expensive.
Faces a lot of competition.
Some of its products can be expensive.
Marketing is one of the newer marketing management philosophies. It is a very 21st-century concept
that truly believes “the customer is king”. Here ever decision will be influenced by the needs of the
customer. Right from production and design of the goods to its transportation, every process has the
customer in mind.
Since customer satisfaction is the main goal of the marketing concept they need not worry about selling
or production. Since they are fulfilling all the needs of the consumers it is a given the consumer will pay
an appropriate price for the product.
5.Societal marketing concept
It focuses on the society’s well-being.
Business focuses on how to fulfil the needs of the customers without affecting the environment.
This philosophy believes that business is part of the society and therefore should take part in social
services in society /giving back to society.
Most big companies have been practicing Corporate Social Responsibility {CSR} as part of their
marketing activity’.
They design a product which is not harmful to the society.So this concept will focus on the satisfaction of
consumer needs without harming the society or the environment in the process.

MARKETING VS SELLING
1.focuses on customer’s need 1. Focuses on seller’s needs.
2.customers enjoy supreme importance 2. Products enjoy supreme importance.
(Customers feel valued) {Value products they sell}
3. High pressure to sell goods already produced. 3. Product planning and development to
4. profit through customer satisfaction. match products with market.
5. Caveat vender (let the seller beware)4. Profits through sales volume.
5. Caveat emptor (let the buyer beware)
6.planning is long term I.e., in terms of tomorrow’s
Sales and future growth.6. Planning is short term i.e. in terms of
today’s sales and profits.
MARKETING ENVIROMENT
Consists of actors and forces outside the organization that affects management’s ability to build and
maintain relationships with target customers.
The environment offers both opportunities and threats.
 Opportunities that can be exploited to the advantage of the organization.
 Threats to the organization that if not dealt with appropriately may lead to the collapse of the
business.
Both opportunities and threats can’t therefore be ignored.
Components of marketing environment
 Micro environment
 macro environment
Micro environment
These are forces/actors close to the company which affect their ability to serve customers.
The marketer is in most cases in charge of the micro factors and can control them as long as a marketer
can identify opportunities to exploit and the threats to deal with.
Company’s internal environment consist of areas inside a company.
Actors in the micro environment
 The company itself -top management.
 Suppliers.
  Marketing intermediaries.
 Customers.
 Competitors.
 Public.
Suppliers
Are individuals and firms that provide the resources needed by the company to enable them
produce goods and services e.g., suppliers of raw materials, fuel, electricity, labor,capital or any
other thing needed for the business.
The company – top management
This consist of the people in charge of the organization i.e., chairman, board of directors. They set
the company’s objectives, strategies, make decisions, supervise all the other members of the
organization as well as monitor and ensure that each department is carrying out activities assigned
to it. E.g., financial department, purchasing department, research and development department,
marketing department, accounting department and production department.
Marketing intermediaries
These are individuals or independent business organizations that directly help in moving goods and
services from the suppliers to the organization and its competitor to the customers. They therefore
include any individual or organization involved in transportation, promotion, storage etc.
They include;
I. Middlemen/resellers
These are distribution channel firms that help a company to find customers. They buy products from
suppliers and sell to companies or buy finished products from the company and sell to customers at a
higher price.
2. physical distribution firms
These are firms that help move goods from the point of origin to various destinations. They include;
airlines, road and trucking companies. they also include warehouses or deports.
3. marketing service agencies
Are firms that help the company to promote its products and target the right market. Include research
firms, advertising agencies, media firms etc.
4. financial intermediaries
These are firms that help organization in managing their resourcesas well as insuring organization
against possible risks. Include banks and insurance companies.
5. company/marketing organization.
Looks for customers and inform them about the availability of certain products.
Competitors
Every company faces competition.A company must therefore struggle to serve its customers better than
the competitors simply because they will be both competing for the same customer’s attention.

Types of competitors
a) Desire competitors
They satisfy other desires of the consumer which you don’t satisfy i.e., providing packaging.
b) Generic competitors
They satisfy some need but in a cheaper way or through imitation. This can be achieved by cheaper raw
materials or cheaper sources of labor.
c) Product form competitors
This occurs within the same organization where you offer similar product that compete with each other
in order to; -get used to the idea of competition.
-make it difficult for anybody who wants to come in and compete with you.
- retain customers who tend to switch from one brand to another within the company’s
products e.g., Coca-Cola.
d) Brand competitors
They satisfy the same need and sometimes offer the same products. The only different is the brand
name e.g., petroleum productsare marketed under the same names: Caltex, Agip. To draw customers,
you have to offer additional services e.g., quick services, cleaning of windscreens, cafe etc.
Customers
Customers are people or organization with needs to satisfy, money to spend and willingness to spend
the money.
Categories of consumer markets
1) Consumer markets- are individuals and households that buy goods and services for personal
use.
2) Industrial /business markets- are individuals and households that buy goods and services for
further processing or for use in the production processes with the intention of selling the
finished product.
3) Government markets- are government agencies e.g., central bank of Kenya that buy goods and
services in order to provide public services that are essential to its citizens.
4) Reseller markets- are individuals and organizations that buy goods and services in order to resell
them without changing the nature of the goods. E.g., wholesalers and retailers.
5) International markets- they are foreign buyers who include consumer, industrial, reseller and
government markets in the foreign countries.
Publics
A public is any group that decides to have an interest in the company’s activities or any group that has
an impact on the ability of the company to achieve its objectives.
Types of publics
There are seven types of publics;
1. financial publics
they influence the company’s ability to obtain funds. They include banks, insurance companies, stock
market etc.
2. government public
Affect the company by passing legislations and laws that put restriction on the company’s actions.
3. Media public
Carries news, feature and editorial opinion that may influence customer’s opinion towards the business.
E.g., newspapers, magazines and television stations.
4. General public
Can greatly affect the company as any changes in their attitude will affect the company. Consist of
population at large.
5. Local public
Neighborhood and community organizations that will question a company’s impacton the local area and
the level of responsibility of their action.
6.internal public
Consists of those whoare employed within the organization and deal with the organization and
construction of the company’s product. E.g., employees.
7.Citizen-action public
Include governmental group and minority group that can question the actions of the company and put
them in the public spotlight. E.g., consumer organizations.
Macro environment
 Political factors
Company needs to consider the political environment when creating business strategies. The entire
political environment includes looking at the government policies and the risks and the instability of the
current political factors.
The political instability can influence the business and duration that business is profitable.
Some of political issues include;
- Political instability.
- Government instability.
- Trade regulations.
- Taxation policy.
- Unemployment policy.
 Economic factors
The economic factors of the business are all variables that impact on how the consumer spend their
money and the power of the purchase.
The economic development in a country is an important factor when scanning the economic
environment.
When promoting or selling product, it’s important for a business to consider extra financial information
e.g., current rates, taxes, etc. in economy of that country.
Examples of economic factors
- Interest rates.
- Inflation rates- rate at which prices increases over time, resulting in a fall in purchasing value of
money.
- Growth in spending power.
- Customer liquidation- when unable to pay bills when due.
- Growth of people in pensionable age -the purchasing power is low.
-the longer you stay in company the more you get paid.
-rigid to change.

Social cultural environment

It looks at the values, the customs and norms of environment of which a company or organization is
placed.
Example of social cultural
- Value and beliefs
- Language
- Religion
 - Education
- Lifestyle
- Literacy level
 It’s the culture of people vs company’s product.

Technological factors
New technology produces new opportunities for organizations and companies to create, sell and
promote a product.
Technology is rapidly growing and changing therefore one has to be current.
E.g. internet, social media.

Environmental factors
Include the natural resources that affect the selling and marketing of the products or services.
The main trend of the environmental factors that you need to consider include;
Increased pollution and growing shortage of raw materials.
A business might for example use recyclable and repackaging thus making environment better for the
users.
Example for environmental factors
- Waste disposal/management
- Pollution monitoring
- Energy consumption-never waste energy
- Competitive advantage- operate in a clean environment in order to overpower competitors.

Legal factors
Include laws and regulations of a government or state.
These laws will influence how a company sell its product or services.
e.g.
- Employment laws
- Safety and healthy environment laws
- Product safety laws
- Advertising regulation
- Product labelling
- Labor laws

Demographic environment
This refers to human population in terms of size, density, gender, location, income bracket, occupation
and other statistics.

How changes in demographic environment affects marketing decisions

1. Purchasing power
Different products and services appeal to different income groups.
Purchasing power of people differ depending on their income level. People with high income level will
tend to buy products of high prices while people with low-income level will purchase products of low
prices. Marketers should therefore design a product with the knowledge of purchasing power of the
target customers. Income bracket determines ones purchasing power.

2. Age
Products and services appeal to different age group e.g. goods that interest teen may not interest old
people.
3. Gender
If a population comprises of more female than male then more products should be manufactured for
the female but without ignoring the minority male.

4. Family status
Companies need to understand the overall status of the population in a specific area to determine iftheir
products or services will appeal to them. Family status is a critical demographic variable that exerts
significant impact on a business strategy.
If the family consist of more children, then the marketer should design more products that targets
children.
5. Geographic Region
Geography also affects buying preferences and behaviors of customers. Companies that want to grow in
sales andmake profits need to understand how geographic regions impact customer preference.

MARKETING MIX ELEMENTS

Marketing mix is a set of actions a business takes to build and market its product or service to its
customers.
It helps business offer its customers the right product at the right time and at the right place for the
right price.
Marketing mix is executed through the 4p’s of marketing and the extended 3 more additional tools
making it 7p’s of marketing.
Business use these marketing mix elements to generate the response they want from their audience.
Elements of marketing mix
To develop the correct marketing mix for your product or service, one needs to understand the Ps of
marketing.
Marketing mix 4ps
Product -variety, quality, design, brand name, features, packaging.
Is a good or a service that is offered as a solution to satisfy the needs of your customer. It’s the actual
thing being sold to the customer i.e. physical product such as shoes or an intangible service i.e. hotels.
The company must take into account what the customer is expecting and needing from the product,
then look to meeting those needs and expectations. You should include the product features, name,
packaging, quality, variety etc.
Price- list prices, discount, payment period, credit terms.
The next element of the marketing mix is the price your customer is willing to pay for your product. This
helps determine the profit you will generate.
When setting a price of your product, consider cost of production, pricing of the competitors and the
perceived price value.
Place-channels, coverage,locations,inventory, transportation,logistics.
It’s about distribution center or the methods used in distributing it to the customers.
The place should be easily accessible to the customer e.g. if you have a physical store/shop, it should be
located in a place that can be easily discovered by the customer. You should consider whether or not a
sales force necessary.
Promotion-
Refers to the method a business uses to gain the attention of the customers to their products. They
include; sales promotion, customer service, public relations, advertising, personal selling etc.
You should consider strategies of the competitors, effective channels to reaching your customers and
whether promotion done match the perceived value of your product.
(Extended 3PS)
People
Refers to both your customers and employees who are directly related to the product or service.
As much as you need to study your target market to understand whether they need the type of the
product you are offering, you need to hire the right people who are capable of giving their best to build
your company.
Process
Include the various mechanisms and procedures which help the product to finally reach its target
market.
Physical evidence
Refers to what the customer sees when consuming your products or services. Could include your
branding, packaging, physical environment where you sell your product etc.

Importance of marketing mix

1.Helps to learn when and how to promote your product or service to your customers.
2.Helps identify and understand the requirements of customers.
3.Helps business make use of their strengths and avoid unnecessary costs.
4.Helps understand what your products/ services can offer to your customers.
5. Help plan a successful product offering.

CONSUMER BUYING BEHAVIOR

Consumer behavior is the behavior of the final consumers/customers who may be either households or
individuals when it comes to either preparing to buy, the actual buying or reviewing the performance of
a product that they purchase.
Consumer behavior refers to all the psychological,social, and physical behavior of potential customers as
they become aware of the products, decide whether they should purchase it, consume it, and tell others
about the productsand the services
Importance of studying consumer behavior.
1. To find out how consumers react to various marketing factors that the company mightuse.
2. To find out how consumers react to different product features and prices.
3. Try and find out what goes on in the consumers mind.
4. To understand the consumers buying characteristics, how consumers look at the factors and reacts.
5. To understand the buyer’s decision-makingprocess and how it affectsthe buyer’s behaviors.
6. To satisfy need of customers -consumer respond favorably while evaluating the products that best
satisfy their needs. A marketer studies how consumers spend their available resources on the
consumption of the related items.
7.For effective market segmentation- the company divides its potential markets into smaller segments
to design specific product and do promotional campaign.
8. Retention of customers-consumer behavior is not just important to attract new customers, but it is
very important to retain existing customers as well. When a customer is happy about a particular
product, he will repeat the purchase.
Factors affecting consumer behavior
Consumer purchases are influenced by variety of factors which in most cases can’t be controlled by
marketers. Such factors must however be clearly understood and taken into consideration whenever
making decisions. They include;
I. Cultural factors
II. Social factors
III. Psychological factors
IV. Personal factors
V. Economic factors

Cultural factors
A group of people are associated with a set of values and ideologies that belong to a particular
community. When a person comes from a particular community, his/her behavior is highly influenced by
the culture relating to the community.
They include;
I. Culture-cultural factors include basic values, needs, wants, perceptions and behaviors that are
observed and learned by a consumer from family or people around them.
II. Sub-culture- in a cultural group, exist many sub cultures which share same set of believes and
values. Sub culture can include people from different religion.
III. Social class- each society has a social class which can be determined by income, occupation,
family background, education etc.
Social class is important to predict consumer behavior.
Social factors
Human beings are social beings and live around many people who influence their buying behavior.
They try to copy others and wish to be socially accepted in the society. Therefore, their buying behavior
is influenced by other people around them. i.e.
a) Family- plays important role in shaping the buying behavior of a person. A person develops
preferences from his childhood by watching family buy the same products even when they grow
up.
b) Reference groups- is a group of people with whom a person associates himself. Generally, all
the people in the reference group have common buying behavior and influences each other.
c) Roles and status- a person is influenced by a role he plays in the society. If a person is in a high
position, his buying behavior will be influenced largely by his status. E.g., chief executive officer
in a company will buy according to his status while a staff or an employee of the same company
will have different buying pattern.
Psychological factors
Human psychology is a major determinant of consumer behavior. They are difficult to measure but are
powerful enough to influence a buying decision. They include;
I. Motivation- when a person is motivated enough, it influences the buying behavior of
the person.
II. perception- consumer perception is a process where consumer collects information
about a product and interpret it to make a meaningful image about a particular product.
E.g., through advertisements, promotions, social media etc.
III. Learning- when a person buys a product, he gets to learn something about it depending
on consumer’s skills and knowledge.
IV. Attitudes and beliefs- consumers have attitude and beliefs which influences their buying
decisions. Based on this attitude, he behaves in a particular way towards a product
hence marketer should understand consumer’s attitude.
Personal factors
Factors that are personal to consumers influence their buying behavior. They differ from person to
person. They include;
I. Age- the buying choices of youths differs from that of middle-aged people. Elderly people have
totally different buying behavior. Newly married couples may be interested in babies’ things
while an older couple may be interested in building materials.
II. Occupation- a person’s occupation affects the goods and services bought e.g., a mechanic will
buy an overall for his work clothes and may not care much of what they look like at work while
an executive will buy business suits. Marketers need to identify the occupational groups that
have an interest in their products.
III. Income- has the ability to influence the buying behavior of a person. Higher income gives
higher purchasing power to consumer while low-income consumers spend most of their
income on basic needs i.e., food and clothes.
IV. Lifestyle- is an attitude and a way in which an individual stay in the society. Buying behavior is
highly influenced by consumer’s lifestyle.

Economic factors
The consumer buying habits and decisions greatly depends on the economic situation of a country or a
market. When consumers experience a positive economic environment,they are more confident to
spend or buy products.
Whereas, a weak economy reflects a struggling market that is impacted by unemployment and lower
purchasing power. They include;
I. Personal income- when there is an increase in disposable income, it leads to higher expenditure
on various items. When the disposable income reduces, spending on multiple items also reduce.
Disposable incomerefers to money that is left after spending towards the basic needs of a person.
II. Family income- is the total income from all the members of a family. When more people earn in
a family, there is more income available for shopping basic needs and luxuries.
III. Savings- if a consumer decides to save more, his expenditure on buying reduces.
 Stages of consumer buying behavior
Consumers go through a set of steps while buying a product. They include;
 Need recognition/identification
 Information search
 Evaluation of alternatives
 Purchase decision
 Post purchase evaluation/decision

 Need recognition/identification
This is the first stage of the buying process. The consumer will not initiate buying
without recognizing needs or wants.
In this stage, the marketer should identify the needs of the consumers and offer the
products based on their desire.
 Information search
At this stage, the consumer is aware of his need or want. He also knows that he wants to
buy a product that can settle his problem. Therefore, he wants to know more about the
product and this leads to information search stage.
The consumers will try to find out the options available and the best solution for his
problem. The buyer will source information both from within or external business
environments, i.e., read newspapers, watch tv, advertisements, online and even ask
friends and family, e.g., if a consumer wants to buy laptop, helooks for a laptop, its
features, price, discounts, warranty, after sales service etc.
 Evaluation of alternatives
After the consumer has done enough research about the product to solve his problems,
he now evaluates alternative products that can solve his problems. Various points of
information gathered from different sources are used in evaluating alternatives
e.g.,based on durability, brand, price, quality, services, since the market offers many
products that can solve the problem of consumer. At the stage, consumer will rank his
choices and pick a product that best matches his needs or wants.
 purchase decision.
At this point, the consumer is aware of pricing and payment options available. The
consumer now decides whether or not buy. They can still decide not to buy due
negative feedback from friends or other consumers who bought it.
At this stage, a marketer should find out various reasons why consumer hesitates to
buy.Reasons could be price,value, etc.
 Post – purchase evaluation.
Last stage which most marketers ignore.
After buying products, consumers compare products with their expectation. Two
outcomes are available; either satisfied or dissatisfied if expectation not met.
A dissatisfied customer may feel as if he made wrong decision.
A marketer has to make sure that the consumer will be satisfied with the products so
that his experience will lead to repeat purchase.
 Types of consumers buying behavior or situations.
1.Complex buying behavior
This is buying of expensive, infrequently bought products. Consumers highly involve
in purchase research by committing to invest.e.g., a house or a car.
2.Dissonance – reducing buying behavior
The consumer is highly involved in the purchase process buthas difficulties
determining the differences between brands.
Happens when consumers worry that they will regret their choice.They buy without
much research based on convenience or available budget e.g.,diamond ring
3.Habitual buying behavior.
Characterized by the fact that the consumer has very little involvement in the
product or brand category e.g., buying of bread. You are exhibiting a habitual
pattern not strong brand loyalty.
4. variety seeking behavior
in this situation, a consumer purchases a different product not because he is not
satisfied with the previous one but because he seeks variety. E.g., when buying a
new perfume.
MARKET SEGMENTATION, POSITIONING AND TARGETING
Market segmentation is dividing the market into distinct groups of consumers with similar needs,
characteristics or behavior who might require separate products or separate marketing mix.
Marketers normally consider how buyers differ in their;
- Needs
- Resources
- locations
- Buying attitudes
- Buying practices
Through this, large markets are divided into segments which can be reached more easily, effectively
with products that match the unique needs of the customer.
Types of consumer markets
Consumer markets- individuals who buy goods and services for own use.
Business market- They buy goods and services for further Processing or use in their production process.
Government markets- buy goods to produce public services or transfer to needy citizens.
International markets-buyers from other countries
Resellers – purchases to resell at a profit. Buy goods and services to sell at a profit.

Bases/ variables of market segmentation

1.Demographic segmentation
Divides the markets into groups based on variables e.g. age, gender, family, size, income, occupation,
education, religion, race and nationality. Used by the companies to get the right population that
consumes their products.
Demographic factors are easier to measure than other type of variables;
a) Age – this is where different products are offered to different age groups. Markets that are
commonly segmented by age includes clothing, toys, music, auto mobiles, soaps, food etc. E.g. a
product may target children, teenagers or adults.
 b) Gender- dividing market in two different groups based on gender. Common in products such as
clothing, cosmetics, perfumes etc. Appropriate packaging and advertising will therefore be used
to reinforce the gender image.
c) Income- income is used to divide the markets because it influences the purchasing power. Those
with high incomes are targeted with luxury goods while those with low incomes can be targeted
with smaller size packages.
2. Geographic segmentation
Refers to dividing a market into different geographic units such as nations, regions, cities or
neighborhoods. For example, national newspapers are published and distributed to different cities in
different languages to carter to the needs of the consumers.
3. Behavioral segmentation
Under this, buyers are divided into groups on the basis of their knowledge of, attitude towards, use of,
or response to a product.
Behavioral segmentation includes segmentation on the basis of occupations, user status, usage rate,
loyalty status, attitude.
4. Psychographic segmentation
Relates to personality, lifestyle and attitude of the individual. It is believed that the consumer buying
behavior is determined by his personality and lifestyle.
Personality refers to the traits, attitudes and habits of an individual and the market is segmented
according to the personal traits i.e. introverts [focuses inward into their own thoughts], extrovert
[focuses outward into the world], ambitious, aggressiveness etc.
Lifestyle means the way a person lives his life and do the expenditures. Here, the company segment the
market on the basis of interest, activities, beliefs and opinions of an individuals.
Advantages of market segmentation
I. Market can identify new profitable segments which deserve special attention.
II. Appropriate service packages can be developed for each market segment.
III. Easier to deal with competition more effectively by using resources more effectively.
IV. Marketer can modify his products/services and marketing appeal to suit the target segment.
V. The marketer can better allocate the total marketing budget with the help of knowledge about
different segments.
Disadvantages of market segmentation
I. Segmentation increases costs. Cost of production arises due to shorter production runs and
product runs product variations.
II. Large inventory has to be maintained by both the manufacture and the distributer.
III. Promotion and distribution expenditures increases when separate programs are used for
different market segments.
IV. When characteristics of a market segment change, investment made already might become
useless.
Positioning
Refers to the place that a brand occupies in the minds of the customers and how it is distinguished from
the products of the competitors.
In order to position products or brands, companies may emphasize the distinguishing features on their
brand [ what it is, what it does, and how].
Targeting - It is the process of evaluating each market segment’s attractiveness and selecting one or
more segments to enter. I.e. we decide on many segments and which one to enter.
It’s the process of selecting the target market from the entire market. Target markets consist of groups
of buyers to whom the company wants to satisfy.
NB; only enter the segments where you can offer superior value and gain advantages over the
competitors.
MARKETING MIX DECISIONS
Marketing mix constitute of all activities related to the product, the price, the place and promotion.
All businesses have choices to make when it comes to marketing their products. These decisions and
how they relate to each other are known as marketing mix.
Product decision
Product is anything that can be offered to consumers with an objective of satisfying a need out of the
value that consumers get.
Product life cycle
Just like living organisms, products have life cycle which consists of different stages of a product which
begins from the production and endsat the last stage called decline.
Depending on the stage in which a product is in, there are a number of marketing strategies that are
required to sustain the ever-changing marketing environment and the ever-increasing opportunitiesin
the market.
Introduction stage
 Sales are low because consumers are not aware of the company’s product.
 Advertisement costs are high at this level because prospects must be informed about the
product.
 There is negative profit.
 Distribution is done selectively and sometimes scattered.
 Price is normally assumed to be higher in order to cover production costs.
 On promotion, the company sometimes gives free sample of the product.
Growth stage
At this stage, sales start climbing rapidly and are higher and increases because customers have been
aware of products and its benefits.

Strategies applied at growth stage

Due to competition, the market would have to come up with strategies on how to deal with the
situation. They include;
 Working towards improving product quality
 Adding new product features
 Improving distribution coverage
 Adopt a persuasive advertising strategy
 Use promotional campaigns e.g. sales promotion.
 Lower prices to attract customers who are price sensitive.
Maturity stage
This is the most profitable stage. Due to competition in growth stage, market loses some of their
customers to the competitors due to strong challenges and experiences. Marketers find
 themselves under pressure to modify marketing elements e.g. introduces new product usage,
new product features, repackaging, new labeling etc.
At this stage, market is forced to invest more in research and development so as to find better
versions of the product.
Weak products may be withdrawn from the market as sales level off and profits decline, some
weak competitors drop off and the market is only dominated by established competitors.
Decline stage
The product at this stage has started greatly losing the market and in the most cases, a product
is sold at a throw away price with the company hoping to introduce a new product.
Decline may be due to all kinds of development e.g. technological development, shift to
consumer taste etc.
NB- it would be dangerous to retain a weak product because;
- Too much management time would be wasted on the product,
- Product would require frequent price adjustments.
- Product would require more advertising efforts.
- It would delay the search for a replacement.
Attention need to be paid on the product and make decisions as to whether to retain or drop the
product.
Reasons for new product failure into the market
1.Poor positioning of the product in the market
Some companies develop products and put them in where they not be purchased and therefore they
don’t make sales though the companies still manufacture them.
2. Inappropriate time of introduction
When the time of introducing a product is too short, it would mean that the product quality might have
been ignored but when the time is too long, the chances of other competitors moving into the same
market may be high.
3. Inadequate product features
If the actual product is not well designed, the product is likely to fail. This is based on assumption that
consumers will buy new products without considering the features.
4. Executive failure
Some products are meant to fail when some senior executives ignore very important findings at the
various stages of the new product.
Sometimes the companies do not use most effective marketing strategies i.e. pricing that is extremely
high in consideration with the value of the product or use of poor distribution channel.
5.Competition
A number of competitors are stronger in terms of the product that they produce such that introduction
of the new product by other companies may not have impact on them.
6.Lack of enough recourses to make up a product
Majority of companies may not have enough resources to implement all activities in line with the new
products. For instance, resources for promotional purposes may not be adequate.
Why companies develop new product
1.To fight off competition specially to fight competitors with superior products in order to win the
market.
2.To pursue growth opportunities i.e. to enlarge the market and hence increase the companies’
revenue.
3.To utilize under utilized marketing and production potentials. Sometimes organizations do not fully
utilize the work forces thus, they come up with a new product to engage them.
4.To fulfil customer taste and preferences. There is always a change in consumer need and therefore
companies are forced to introduce new products to meet the consumer taste and preferences.
5.completion of a product life cycle. Replacement of a product which has completed its life cycle can be
through a new product development.
6.Emerging new ideas. In most cases new ideas are ever coming into the market. Ideas that need to be
developed which eventually lead to new product development.
7.To increase the company revenue base.
NB/every company must carry out new product development if it has to exist in the business world
therefore it needs to produce an outdated product and maintain the company’s sales.

New Product Development Stages

A new product goes through 8 stages.
1. Idea generation
This is where the company develops the pull of ideas hopping that one will develop into a product to be
solved. Ideas can be many and from a number of people from which one idea is to be developed.
2. Idea screening/ pruning
Where you pick out the best idea out of the many that are available.
3. Concept development
Where the selected idea is taken up and created within the minds of the concerned and therefore
developing it and made into a product.
4. Marketing strategy development
This consist of setting up marketing strategies in line with the new product. It may involve the size,
structure, name of the product, the distribution strategy, the price and marketing budget for the year.
5. Business analysis
This iswhere the management tries to estimate whether the sales of the product will be satisfactory to
enable production of product and if not, discontinue the production process in order to avoid the
company getting to main process.
6. Product development
This is a stage of producing the physical product that the company tends to sell in the market.
7. Test marketing
Involves introducing a product to pre-selected markets and this is taken to test the reaction of the
targeted customers on their willingness to purchase the product.
8. Commercialization
This is producing products in large quantities for the larger market. This is done when the testing of the
market has proved to be positive
Price Decisions
Price is the money or any other consideration including goods and services exchanged for the ownership
for use of a good or a service. It’s a process to determine what manufacturers receive in the exchange of
the product. Pricing depends on various factors i.e. manufacturing cost, raw materials cost, profit margin
etc.
Factors influencing pricing
The following are factors that needs to be considered before determining the price of a product.
 Pricing objectives of the company
Pricing objectives vary from one company to another. It can be either for profit maximization,
market share enlargement or even get satisfactory profit therefore, organizations are guided by the
objectives.
 The costs incurred
Involves calculating the costs associated with the product, therefore before a product passed,
the company has to price it in order to cover for cost of all production, distribution and even the
risks.
 The level of demand
This involves estimating the demand curve I.e. price fixing varies with the level of demand such
that the high the demand for a product, the higher the price and vice versa.
 Competitor’s price
The company has to analyze the competitor’s cost prices and offers before a price can be fixed
on a product. The company needs to range mark the costs against that of the competitors and
learn whether it is operating at a cost advantage or disadvantage.
 Price -quality relationship
Customers use price as an indicator of quality. If a product is priced higher, the instinctive
judgement of the customer is that the quality of the product must be higher.
 Distribution channels used.
This is a pathway through which the products manufactured find their way to end users. If
distribution channel is large, price of the product will be high and if short, price of the product
will be short.
 Political factors.
Where price is out of line with manufacturing costs, political pressure may act to force down
prices. Exploitation of a monopoly position may bring short term profits but incurs backlash of a
public inquiry into pricing policies.
Importance of pricing
1. Price determines the future of the product.
2. It determines the acceptability of the products to the customers.
3. It is a tool of competition.
4. It determines quality of a product-defines value of the product.
5. It regulates demand
6. Price reflects purchasing power of the market- the lower the price in the economy, the higher
the purchasing power of consumers.
Place mix [distribution]
Refers to where the product/service will be sold.
Channels of distribution
A channel of distribution is a link or channel of distributers, distributors or middlemen used by
marketers to produce and make products or services available when and where the consumer wants
them.
Types of channel
1. zero-level channel [P-C]
This is a channel where the producer sells to the consumer directly and hence no intermediaries.
Commonly called direct marketing. Producer>consumer
Where producer sells to consumer.
2. One level channel [P=R=C]
Comprises of producers who sell the products to retailor who resells it to the consumer and thus only
one intermediary e.g.
Supermarkets[producer/manufacturer]>large retailers>consumers.
3. Two level channel.[P=W=R=C or P=A=R=C]
There are two intermediaries in this case which can be either in the two forms i.e. P=W=R=C or
P=A=R=C.
However, the two forms are almost similar, in the case where the Agent is used, the Agent is nit under
his/her custody, they only act on behalf of the producer or earn commission. E.g.
Manufacturers> Wholesaler>Retailer>Consumer
4. Three level channel. P=W=A=R=C 0r P=A=W=R=C
This involves three levels in the intermediaries in the distribution process and commonly used in the
international trade. E.g.
Manufacturer>Agents>Wholesalers>Retailers>Consumers.
NB/ The more the channels of distribution, the further away the consumer is and the higher the price of
the product.
Factors considered when choosing a channel of distribution
A. Product characteristics factors.
1.Perishability of the product.
The more perishable the product is, the higher the chances of using a shorter channel of distribution.
If the value of a product has to be maintained, distribution channel should be shorter while product
whose value does not diminish within a shorter period, a larger channel of distribution can be used. E.g.
vegetables, fruits and bakery items.
2. The style of the product
In terms of change, the style changes may lead to higher risks and therefore the products that are quick
subject to constant changes in style should be moved as quick as possible to avoid outdatedness of the
product and thus a shorter channel should be selected.
3.Unit value of the product
The higher the unit value, the greater the possibility of success of using direct marketing [the shorter
channel].
If the unit value is low, a longer channel of distribution can be used.
4. The mechanical aspect of the product.
Products which are technically complex and which may require periodic servicing needs a shorter
channel of distribution [direct marketing].
B. Consumer characteristics factor
1.The nature of the market
Different consumers reflect different behaviors and therefore might be comfortable with a particular
channel of distribution for the product they want.
2.Concentration of purchases.
The more the concentration of purchases, the shorter the channel of distribution to avoid the absence
of a product in the market.
Where concentration of purchases is very low, a longer channel can be used.
3. Competitors.
Competition can also affect distribution channel because competitors may influence the other
companies to select a similar distribution channel that is best for the industry.
4. seasonality of sales.
Seasonal characteristics of sales may demand creation of agents in order to deal with the product for
that particular season for the product will notbe urgently needed in market all the time.
5.Intensity of distribution.
Refers to the number of intermediaries that a company uses at each level e.g. decides how many
wholesalers, retailors or agents that the company will use in distributing its products.
6.Bulk and weight.
Heavy and bulky products are distributed directly to minimize handling costs. E.g. bricks, stones.
Reasons for having middlemen in the distribution channel.
 Lack of enough financial resources by the producer to carry out direct marketing.
 Middlemen are taught to have superior efficient? in making goods available under and within
the target market.
 They provide services of breaking bulk into units that meet different consumer groups.
 They stimulate demand in the market by advertising personal selling and sales promotion.
 They provide marketing information that helps the producer to provide market with better
quality products.
 They help in the provision of complementary products of other products and this enables
increase in the sales.
 Help increase return on investments i.e. by increasing their investments in that main lines of
business. This helps producer sell more products.

Promotion decision
Promotion decision is used to find the appropriate and effective methods to promote a particular
product to increase sales.
Elements of promotion mix
I. Advertising
II. Sales promotion
III. Public Relations
IV. Personal selling
SERVICE MARKETING
Def: According to American marketing Association, services are defined as;
“Activities, benefits or satisfactions which are offered for sale or provided in connection with the sale of
goods’’.
According to Phillip Kottler & Broom, services are defined as “any activity/benefit that one party can
offer to another that is essentially intangible and does not result in ownership of anything’’.
Its production may or may not be tied to a physical product.
Examples of services
 Making a phone call to a friend, relative or a client.
 Having coffee at a coffee shop.
 Taking/riding on a bodaboda from point A to B.
  Cutting/making hair in a salon.
 Sending/receiving money through mpesa.
NB/ service differs with goods in many ways;
The way a product is produced, distributed, marketed and consumed is not the way a service is. Hence a
different marketing approach is necessary for the marketing of a service.
Nature/characteristics of services
Intangibility – services can’t be touched or held, they are intangible in nature, e.g. you can touch your
smart phone but can’t hold/touch the services of Safaricom or airtel. Passengers in a train or bus have
nothing but a ticket and a promise that they will arrive at a certain time at a certain destination but
nothing to be touched.
Inseparability- in services, the production, distribution and consumption take place simultaneously.
These three functions can’t be separated.
Services can not be separated from their providers. A product can after production, be taken away from
the producer at or near the point of purchase e.g. in hotel, you order your meal, you wait, delivery by
waiter/ress. all these indicate the providers are part of the service.
Variability- it is impossible to provide similar services every time you experience some changes every
time you buy a particular service from a particular service provider.
This refers to the fact that quality of services varies greatly depending on who provides themand when,
where and how.
Perishability- this means that services can not be stored for later use. They get perished immediately
they are offered. You can store goods but not service since it might have a major impact on financial
results, e.g. missed appointments by doctors or lawyers are charged.
Participation of a customer/user- customers/users participate in every service production. A service can
not be separated from its provider, neither can it be separated from its user.
No ownership- in the sale of services,transfer of ownership does not take place- means
customer/consumer never owns the service. This refers to the fact that one can not own or store a
service but can to a product.
Differences between services and goods.
Basics services Goods
Tangibility services are intangible in nature. Are tangible in nature. Can be
Can’t be touched or held. or held.
Separability Are inseparable by nature. productionFunction of distribution and consumption
distribution and consumption of services of goods can be separated from the
takes place simultaneously. function of production.

Ownership services can’t be owned, they can be hired Can be owned.

for a specific period of time.
Perishability get perished after specified period of time. Can be stored for future use.
Can’t be stored for future use.

Heterogeneity Are more heterogenous. Its very difficult Are less heterogeneous. It’s possible
to make each service identical. to make each good identical.