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AHMADU
BELLO UNIVERSITY
DISTANCE LEARNING CENTRE
ZARIA, NIGERIA

COURSE MATERIAL
MASTER IN BUSINESS ADMINISTRATION (MBA)

BUAD 807: FUNDAMENTALS OF MARKETING

COPYRIGHT PAGE
© 2016 Distance Learning Centre, ABU Zaria, Nigeria
All rights reserved. No part of this publication may be reproduced in any form or by any
means, electronic, mechanical, photocopying, recording or otherwise without the prior
permission of the Director, Distance Learning Centre, Ahmadu Bello University, Zaria,
Nigeria.
First published 2016 in Nigeria.
ISBN:
Published and printed in Nigeria by:
Retina Innovative Enterprise,
Graceland, Zaria.
Kaduna State- Nigeria.
Tel: +234 7035953365, 08054907857
E-mail: malgwisamson22@gmail.com
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COURSE WRITERS/DEVELOPMENT TEAM
Auwal Yahya Ahmad (Ph.D.)
Jamilu Abdulkadir Subject Matter Experts)
Prof. Abiola Awosika
Halima Shuaibu Subject Matter Reviewers
Yusuf Musa (Language Editor)
Prof. Adamu Z. Hassan (Formatting Editor)
Nasiru Tanko Graphics
Ibrahim Otukoya

3
QUOTE
“Open and Distance Learning has the exceptional ability of meeting the challenges of the three
vectors of dilemma in education delivery – Access, Quality and Cost”
‐ Sir John Daniels
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TABLE OF CONTENTS
Title Page
Copyright
Quotes
Table of Content
1.0 Course Information
2.0 Course Description
3.0 Course Introduction
4.0 Course Outcomes
5.0 Activities to Meet Course Objectives
6.0 Grading Criteria and Scale
7.0 Course Structure and Outline
8.0 Discussion Forum
8.1 Topical Discussions
8.2 Discussion Questions
9.0 Study Modules
9.1 Module 1
Introduction
9.1.1 Objectives
9.1.2 Study Units
9.1.23.1 Study Unit 1: Course Overview
Discussion Question(s)
9.1.2.2 Study Unit 2: Product Planning
9.1.2.3 Study Unit 3: Product Life Cycle
9.1.2.4 Study Unit 4: Product Positioning
9.1.2.5 Study Unit 5: Branding, Packaging and Labeling
9.2 Module 2
Introduction
9.2.1 Objectives
9.2.2 Study Units
9.2.2.1 Study Unit 6: Goals of Pricing
9.2.2.2 Study Unit 7: Pricing Factors
9.2.2.3 Study Unit 8: Pricing Policies
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9.2.2.4 Study Unit 9: Pricing Strategies and Mathematics
9.3 Module 3
Introduction
9.3.1 Objectives
9.3.2 Study Units
9.3.2.1 Study Unit 10: Channel Members
9.3.2.2 Study Unit 11: Physical Transportation
9.3.2.3 Study Unit 12: Purchasing
9.3.2.4 Study Unit 13: Promotional Elements and Promotional mix
10.0 Further Reading
11.0 Glossary
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PREAMBLE
You are warmly welcome to this course. I hope that at the end of it, each one of
you will benefit maximally. I look forward to an exciting time and having a warm
relationship with all of you. You all are expected to read all the sessions at the
beginning of the corresponding Semester.
Note: This study guide is necessary for both web and print versions and its
objectives include:
i. To assist you in navigating the course
ii. To serve as a reference manual, not a teaching text
iii. To provide answers to often asked questions.
Do not hesitate to consult me if you need more clarifications.

1.0 COURSE INFORMATION
Course Code: BUAD 807
Course Title: Fundamentals of Marketing
Credit Unit: 3
Semester: First Semester,
Year; One (1)
Lecturer Information
Instructor: Auwal Yahya Ahmad, PhD

2.0 COURSE DESCRIPTION
This course introduces product planning, product positioning and product quality
for you to be equipped with some techniques. It analyses
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pricing perceptions, legal and ethical issues of pricing, pricing policies and pricing
strategies. It explores channels for consumer and industrial products, and physical
distribution. The course further deals with promotional elements and promotional
mix.
1. Standard Texts: Dibb, S., Simkin, L., Pride, W. M., and Ferrell, O. C.
(2012). Marketing: concepts and strategies (6th Edition): Cengage Learning
EMEA.
2. Perreault, Jr., and McCarthy, E. J. (2002). Basic Marketing: a global –
managerial approach (14th Edition): McGraw-Hill/Irwin.

3.0 COURSE INTRODUCTION
Fundamentals of Marketing, is a foundation course in the MBA programme that
aims at developing your generic skills in marketing through
readings, case studies, and marketing research. Specifically,
it seeks to develop your abilities to:
I. Conceptualise product planning.
II. Critically analyse pricing and its perceptions.
III. Effectively communicate with potential market.
IV. Ensure that the products/services are made available within the nooks and
crannies of target market.
4.0 COURSE OUTCOMES

On successful completion of the course, you should be able to:
1. Explain product planning and what it entails, product
stages (introduction, growth, maturity and decline),
product positioning, contemporary packaging and
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labeling issues. Develop intellectual and analytical skills to think
critically and evaluate key theories.
2. Synthesise goals of pricing, basis for pricing, consumer perceptions, legal
and ethical issues in pricing, pricing policies, pricing strategies, and
pricing mathematics.
3. Distinguish roles of channel members, namely; wholesalers, retailers,
agents, brokers, independent representatives. Differentiate channels for
consumer products and industrial products, direct and indirect channels
and plan physical handling of product and purchasing.
4. Learn elements of promotional, advertising, personal selling, sales
promotion, public relations, direct marketing, and promotional mix.
5. Communicate effectively, confidently and professionally both in oral and
in written forms.
6. Work as a team member in a group and collaborate effectively with other
members in the group and organise individual and group work to meet
deadlines.
5.0 ACTIVITIES TO MEET COURSE OBJECTIVES

This is a practical course, as such; there will be interactions through lecture
delivery, case analyses, and group assignments. You have to complement these
with lots of observations, additional reading, and actively
searching for and accessing information on the topics under
discussions. The research will be of the applied variety,
meaning interacting with others and sharing the results of
your efforts in short essays/discussions. Many of the topics we cover may provide
new ideas for use both at work and at home. You will however be assigned to a
study team.
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You are expected to work together on group assignments. Please apply the basics
of group dynamics and try to quickly adjust in your groups so that you can begin to
perform for success. If any of you need to step up as the group leader please do not
hesitate to do so. This is what managers do.
For a better and comprehensive understanding of the material, you are strongly
advised to cultivate reading habit and read the course material and other relevant
texts thoroughly. Each module contains self-assessment exercises for you to test
your understanding of the subject matter. Assignments are to be completed by
midnight on the due date noted on the course syllabus. Late assignments will not
be accepted.
On the first assignment, you should write a brief biography of yourself, family
status, any other information you will like to share, and also how to reorganize
your current schedule to meet the demand of the course. The weekly assignments
are listed in the Course Outline below. Submit your group’s work each week they
are due.
Prepare to post your original thoughts on each group’s topic and respond to at least
two other classmates, sharing why your own line of thinking is the same or differs.
This is the key to an enlightening discussion. Also, bringing in additional resource
and knowledge as well as related life experiences would enhance your response
and command additional points. Also, tutorials will be arranged within the two
weeks on campus activities in which questions will be clarified to enable you
understand fully what you’ve learnt.
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6.0 GRADING CRITERIA AND SCALE
6.1 Grading Criteria
Grades will be based on the following Percentages :

Individual assignments 10%
Group assignment/Discussion Questions 10%
Topic discussion participation 10%
Quizzes/Other assignments 10%
Semester Examination 60%
TOTAL 100%

6.2 Grading Scale
A = 70-100
B = 60 - 69
C= 50 - 59
F = <49
As you work on your research in this course and throughout your
graduate programme, here are some examples of open education
resources that will serve you well.
Open education resources
OSS Watch provides tips for selecting open source, or for procuring free or open
software.
SchoolForge and SourceForge are good places to find, create, and publish open
software. SourceForge, for one, has millions of downloads each day.
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Open Source Education Foundation and Open Source Initiative, and other
organization like these, help disseminate knowledge.
Creative Commons has a number of open projects from Khan
Academy to Curriki where teachers and parents can find educational materials for
children or learn about Creative Commons’ licenses. Also, they recently launched
the School of Open that offers courses on the meaning, application, and impact of
"openness."
Numerous open or open educational resource databases and search engines
exist. Some examples include:
 OEDb: over 10,000 free courses from universities as well as reviews of colleges
and rankings of college degree programs
 Open Tapestry: over 100,000 open licensed online learning resources for an
academic and general audience
 OER Commons: over 40,000 open educational resources from elementary school
through to higher education; many of the elementary, middle, and high school
resources are aligned to the Common Core State Standards
 Open Content: a blog, definition, and game of open source as well as a friendly
search engine for open educational resources from MIT, Stanford, and other
universities with subject and description listings
 Academic Earth: over 1,500 video lectures from MIT, Stanford, Berkeley, Harvard,
Princeton, and Yale
 JISC: Joint Information Systems Committee works on behalf of UK higher
education and is involved in many open resources and open projects including
digitizing British newspapers from 1620-1900!
Other sources for open education resources
Universities
 The University of Cambridge's guide on Open Educational Resources for Teacher
Education (ORBIT)
 OpenLearn from Open University in the UK
Global
 Unesco's searchable open database is a portal to worldwide courses and research
initiatives
 African Virtual University (http://oer.avu.org/) has numerous modules on subjects
in English, French, and Portuguese
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 https://code.google.com/p/course-builder/ is Google's open source software that is
designed to let anyone create online education courses
 Global Voices (http://globalvoicesonline.org/) is an international community of
bloggers who report on blogs and citizen media from around the world, including
on open source and open educational resources
Individuals (which include OERs)
 Librarian Chick: everything from books to quizzes and videos here, includes
directories on open source and open educational resources
 K-12 Tech Tools: OERs, from art to special education
 Web 2.0: Cool Tools for Schools: audio and video tools
 Web 2.0 Guru: animation and various collections of free open source software
 Livebinders: search, create, or organize digital information binders by age, grade,
or subject (why re-invent the wheel?)
Legal help
 New Media Rights is trying to help digital creators use public domain or open
materials legally. They have guides on how to use free and open software
materials in various fields.
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7.0 COURSE STRUCTURE AND OUTLINE
7.1 Course Structure
WEEK/DATE MODULE STUDY SESSIONS ACTIVITY INDIVIDUAL ASSIGNMENT

Week 1&2 RESUMPTION, REGISTRATION, ORIENTATION AND REVIEW OF PROGRAMME SITE
Week 3 1.Study the course material of this session
Study Session 1: 2.Watch the video of this study session
Course Overview 3.Listen to the audio of this study
4 Read: Chapter One of Dibb, S., Simkin, L., Pride, W.
M., and Ferrell, O. C. (2012) Marketing: Concepts and
Strategies (6thEdition) Cengage Learning EMEA.

Product Planning 3.Listen to the audio of this study
4. Read: Chapter Nine of Perreault, Jr., and McCarthy,
E. J. (2002). Basic Marketing: a global – managerial
MODULE 1 approach (14thEdition) McGraw-Hill/Irwin.
5.Review the uploaded response to last week’s
Discussion Question.
Week 5 1.Study the course material of this session 1. Practice review questions in Ch. Ten of
Study Session 3: 2.Watch the video of this study session Dibb, S., Simkin, L., Pride, W. M., and
Product Life Cycle 3.Listen to the audio of this study Ferrell, O. C. (2012). Marketing: concepts
4. Read: Chapter Ten of Perreault, Jr., and McCarthy, and strategies (6th Edition) Cengage
E. J. (2002) Basic Marketing: a global – managerial Learning EMEA. pg. 314.
approach (14thEdition) McGraw-Hill/Irwin.

Product Positioning 3.Listen to the audio of this study
4. Read: Chapter Ten of Dibb, S., Simkin, L., Pride, W.
M., and Ferrell, O. C. (2012). Marketing: concepts and
strategies (6thEdition) Cengage Learning EMEA.
5. Review the uploaded response to last week’s
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Week 7 1.Study the course material of this session 1. Clearly distinguish between a brand and a
Study Session 5: 2.Watch the video of this study session brand name.
Branding, Packaging 3.Listen to the audio of this study 2. Practice review questions on pg. 346 to
and Labeling 4.Read: Chapter Eleven of Dibb, S., Simkin, L., Pride, 347, Ch.Eleven.
W. M., and Ferrell, O. C. (2012). Marketing: concepts
and strategies (6th Edition) Cengage Learning EMEA.
Week 8 1.Study the course material of this session Practice review questions on pg. 626, Ch.
Study Session 6: 2.Watch the video of this study session Nineteen of Dibb, S., Simkin, L., Pride, W.
3.Listen to the audio of this study M., and Ferrell, O. C. (2012). Marketing:
Goals of Pricing
4. Read: Chapter Seventeen of Perreault, Jr., and concepts and strategies (6th Edition)
McCarthy, E. J. (2002). Basic Marketing: a global – Cengage Learning EMEA.
managerial approach (14thEdition) McGraw-Hill/Irwin.
5. Read: Chapter Nineteen of Dibb, S., Simkin, L., Pride,
and strategies (6thEdition) Cengage Learning EMEA.
MODULE 2
Pricing Factors 3.Listen to the audio of this study
4. Read: Chapter nineteen of Dibb, S., Simkin, L., Pride,

Pricing Policies 3.Listen to the audio of this study
4. Read: Chapter Seventeen of Perreault, Jr., and
McCarthy, E. J. (2002). Basic Marketing: a global –
Week 11
M I D S E M E S T E R B R E A K
Week 12 1.Study the course material of this session Practice review questions and problems in
MODULE 2 Study Session 9: 2.Watch the video of this study session Ch. Eighteen, pg. 541 to 542.
Pricing Strategies and 3.Listen to the audio of this study
Mathematics
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4. Read: Chapter Eighteen of Perreault, Jr., and

Channel Members 3.Listen to the audio of this study
4. Read: Chapter Eighteen of Perreault, Jr., and
5. Read: Chapter Nineteen of Dibb, S., Simkin, L., Pride,
Week 14 1.Study the course material of this session Analyse “Crayola promotes coloring in for all”
Study Session 11: 2.Watch the video of this study session case on Pg. 176. Case Study of Ch. 5.
Physical Transportation 3.Listen to the audio of this study Practice review questions in Ch. 14 of Dibb,
MODULE 3 4. Read: Chapter Fourteen of Dibb, S., Simkin, L., Pride, S., Simkin, L., Pride, W. M., and Ferrell, O.
W. M., and Ferrell, O. C. (2012). Marketing: concepts C. (2012). Marketing: concepts and
and strategies (6thEdition) Cengage Learning EMEA. strategies (6th Edition) Cengage Learning
5. Also read: Chapter Fifteen of Dibb, S., Simkin, L., EMEA., pg. 438 to 439.
Pride, W. M., and Ferrell, O. C. (2012). Marketing:
concepts and strategies (6thEdition) Cengage Learning
EMEA.
Week 15 1.Study the course material of this session Practice review questions in Ch. Fifteen of
Study Session 12: 2.Watch the video of this study session Dibb, S., Simkin, L., Pride, W. M., and
3.Listen to the audio of this study Ferrell, O.C. (2012). Marketing: concepts and
Purchasing
4. Read: Chapter Twelve of Perreault, Jr., and strategies (6thEdition) Cengage Learning
McCarthy, E. J. (2002) Basic Marketing: a global – EMEA, pg. 474 to 475.
5. Read: Chapter Fifteen of Dibb, S., Simkin, L., Pride,
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Week 16 1.Study the course material of this session 1. Practice review questions in Ch. Six, pg.
Study Session 13: 2.Watch the video of this study session 206.
2. Practice review questions in Ch.Sixteen,
Promotional Elements 3.Listen to the audio of this study
4.Read: Chapter Six of Dibb, S., Simkin, L., Pride, W. pg. 508 - 509.
and Promotional mix M., and Ferrell, O. C. (2012). Marketing: concepts and
strategies (6thEdition) Cengage Learning EMEA.
5. Read: Chapter Sixteen of Dibb, S., Simkin, L., Pride,
Week 17&18
ON CAMPUS ACTIVITIES/TRAINING/TEACHING
Week 19 REVISION
Week 20&21
SEMESTER EXAMINATION
Discussion Topics shall be uploaded weekly while Discussion Questions are presented in the
appropriate sections.
1. All online postings/interactions should be undertaken within the prescribed time.
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7.2 Course Outline
MODULE 1
Study Session 1: Course Overview
Study Session 2:Product Planning
Study Session3: Product Life Cycle
Study Session4: Product Positioning
Study Session 5: Branding, Packaging and Labeling
MODULE 2
Study Session 6: Goals of Pricing
Study Session 7: Pricing Factors
Study Session8: Pricing Policies
Study Session 9: Pricing Strategies and Mathematics
MODULE 3
Study Session 10: Channel Members
Study Session 11: Physical Transportation
Study Session 12: Purchasing
Study Session 13: Promotional Elements and Promotional mix
8.0 DISCUSSION FORUM

You will be required to participate in two types of discussions.
8.1 Topical Discussions

These are weekly topics which I shall post on the
MBA dashboard. The topics will center on
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contemporary issues and/or current events in the discipline at the time of posting.
You are expected to study and contribute to such discussions. Contribution at these
sessions is necessary.
8.2 Discussion Questions

These are pre-determined topics to be assigned to groups of you and your
classmates who would develop a thesis around the topics, submit the thesis to an
assigned forum where all participants will interact and make comments to add to
knowledge and move the conversation forward.
Relevant Discussion questions are presented under the corresponding Study Unit
while the schedule of response should be posted on the MBA page of the LMS.
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9.0 STUDY MODULES
9.1 MODULE 1: Concepts and Overview
Introduction
The module introduces you to the concept of marketing and its primary aim of
identifying and satisfying target markets both now and in the future. It discusses
product planning, product life cycle and product positioning. The module aptly
examines branding, contemporary packaging issues, and labeling.

9.1.1 Objectives
At the end of the module, you should be able to:
1. Apply marketing principles to products and services
in your organization.
2. Distinguish among marketing orientations.
3. Distinguish among the concepts of product item,
product line, and product mix.
4. Apply the product Life Cycle concepts to products.
5. Identify the importance of brands, brand loyalty, and brand advocacy.
6. Design functional product packages.
7. Discuss the functions of labeling and the legal issues associated with it.
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9.1.2 STUDY SESSIONS
9.1.2.1 STUDY SESSION 1: Course Overview
Section and Subsection Headings:
Introduction
Learning Outcomes
(A) Course Overview
(B) The Marketing Concept
(C) Making the Marketing Concept Work
(D) Benefits of the Marketing Concept
Session Summary
References
Discussion Questions
Introduction
As you already know, marketing is about identifying and meeting human needs.
This study session will enable you to understand the overview of this course, this
session will also provide the basis of our discussions that will follow in the
subsequent study sessions.
Learning Outcomes
At the end of this study session, you should be able to:
1. Explain the concept of marketing.
2. Describe how to make the marketing concept work.
3. Discuss the benefits of marketing concepts.
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(A) Course Overview
Marketing is everywhere, formally or informally. People and organizations engage
in a vast number of activities that we could call marketing, good marketing has
become an increasingly vital ingredient for business success. Marketing
profoundly affects our day-today lives, it is embedded in everything we do-from
the clothes we wear, to the Web sites we click on, to the ads we see.
Marketing centres on a set of processes for creating, communicating and delivering

value to customers; for managing customer relationships; and, for providing
direction to an organisation based on market insights. Marketing consists of
individual and organisational activities that facilitate and expedite satisfying
exchange relationships in a dynamic environment through the creation,
distribution, promotion and pricing of goods, services and ideas.
ITQ: What is one of the shortest good definition of marketing?
ITA: Meeting needs profitably.
The simple premise of marketing is that to be successful, any organisation must

understand its customers’ requirements and satisfy them in a manner that
gives the organisation an edge over its competitors, and by staying abreast of
changing market dynamics it will continue to offer compelling propositions to
these targeted customers. This involves offering the ‘right’ marketing mix of
product, people, service, pricing, promotion and distribution channel. Marketing
depends, therefore, on constant updating of ideas and market knowledge.
Customers are often surprisingly fickle and modify their needs and wants; rivals
alter their strategies; and, forces in the marketplace regularly change. There is,
though, much more to marketing than serving customers through marketing
programmes.
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Marketing’s core focus is indeed the understanding and ongoing satisfaction of
targeted customers, but marketers must provide much more for their
organizations. Effective marketing should analyse markets in order to be able to
maintain customer interest and satisfaction, combat competitors, identify
opportunities and recognise threats. Marketers should be the ‘eyes and ears’ for
their organisations regarding market dynamics. Having determined which
opportunities to pursue and having agreed the mix of target markets to prioritise,
marketing should create target customer engagement strategies, establish the ‘wow
factor’ and ensure there is a robust basis for competing. Marketing programs
should be developed appropriate for the successful execution of this strategy.
ITQ: What is the focus of marketing?
ITA: Marketing’s core focus is indeed the understanding and ongoing satisfaction of
targeted customers,
(B) The Marketing Concept

The marketing concept could be seen to be a common sense managerial orientation
that understands the needs and wants of customers in the market, and adopts the
operations of the organisation to deliver the right goods and services more
effectively and efficiently than company’s competitors. Kotler (1991) puts this into
two practical perspectives namely; “company management remaining sensitive
to market needs and company management operating the enterprise in a
market-oriented manner”. These constitute the two main areas of responsibility
for the management in an organisation.
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(C) Making the Marketing Concept Work
In spite of the difficulties inherent in implementing the marketing concept,
Rosenberg (1977) believes that where there is a will to use the marketing concept,
there will be a way to implement it. The proper method of implementation may
vary with each organisation’s size, product, market and management style. To
make the marketing concept work, there must be customer orientation. This
orientation must be top down. That is, it has to start with the head of the
organisation. The executive must have a thorough understanding of the concept
and its application to the organisation. In fact he must adopt a marketing frame of
mind. Rosenberg argues that, this commitment to the marketing concept must also
be shared by key members of the executive staff, there must be a unity of purpose
and outlook. The “ prima donna syndrome” in which a particular person or
unit within the organisation perceives himself (or itself) as the heart of the
company, with other persons or unit performing only peripheral functions
should be avoided. Also there should be a marketing department with a marketing
executive, integration of marketing functions and a marketing staff. This is the
phenomenon, which makes the marketing concept and process possible.
ITQ: What is the proper method of implementing marketing concept?
ITA: The proper method of implementation may vary with each organisation’s size,
product, market and management style
(D) Benefits of the Marketing Concept

Rosenberg (1977) provides the following benefits of implementing the marketing
concept:
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 Reduce business risk as a result of systematic market research, the scientific
acquisition and analysis of market data relevant to the decision making and
better market and sales forecasting.
 Improves business planning as a result of earlier identification and
assessment of future market trends and opportunities and the acceptance of a
planning discipline based on defined objectives with which all departments
must gear their programmes.
 Greater competitiveness based on marketing skills. As more and more of our
competitors achieve technological and manufacturing efficiency, the
differences in the products from companies will tend to narrow.
Session Summary
In this study session, you’ve learnt the overview of the marketing concept, things
needed to be done in order to make the marketing concept work and the benefits of
marketing concepts.
References
1. Dibb, S. S., Pride, W. M & Ferrel, O. C (2002). Marketing: Concepts and
Strategies, 6th Edition. Hampshire: Cengage Learning EMEA.
2. Kotler, Philip (2006). Principles of Marketing. New-Delhi: Prentice Hall.
3. Kotler, P (2000). Marketing Management, the Millennium Edition. New
Delhi: Prentice —Hall of India.
4. Michael, D. Hutt and Thomas W. Speh (2002). Industrial Marketing
Management. The Dryden Press.
5. Perreault, Jr. and McMarthy, E. J (2002). Basic Marketing: a Global
Managerial Approach, 14th Edition. New Jersey : Mc Grow-Hill/Irwin
6. Stanton, W. J., M. J. Etzel and B.J. Walker (1994). Fundamentals of
Marketing 10th Edition. New York: McGraw-Hill, Inc.
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1. When companies hit a down turn in their businesses and funds are scarce,
the marketing budget is usually one of the first to be cut.
What in your understanding of what marketing entails
disagree or agrees with this action.
2. A marketing philosophy is like a guide that indicates
the emphasis that firms give in their marketing activities. An organisation
can adopt one or more philosophies depending on the market it is facing.
Identify the six marketing philosophies in the literature and write short notes
under each. What philosophy or philosophies would you advise ‘Tecno’, the
emerging giant in cell phone production and popularity, to adopt? Note that
‘Tecno’ phones are growing in popularity amongst consumers on very tight
budget looking to enjoy mobile technologies that until now has been
exclusive to the middle class and the rich.
3. What is Marketing? What is meant by the Marketing concept?

4. How is a marketing orientation different from the production or sales
orientation?
5. There is a notion that most firms that embrace the marketing concept are
more successful than others. Do you agree with this?
Defend your stance. To what extent also has the
marketing concept been embraced by businesses?
6. There are different orientations which firms hold on
to which makes up their philosophy. They are: i) economic orientation ii)
marketing orientation iii) production orientation iv) cost/efficiency
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orientation v)sales orientation vi) reformist critique of marketing vii) radical
critique of marketing.
Write extensively on each of the above mentioned orientations.
7. Give a detailed description of the concepts, Social and societal marketing.
8. Write exhaustively on the term, Marketing Myopia (Levitt, 1960).
9. Write extensively on any two critics of the marketing concept and their
respective orientations about the concept
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9.1.2.2 STUDY SESSION 2:
` Product Planning
Section and Subsection Headings

Introduction
Learning Outcomes
(A) Product Planning

(B) New Product
(C) New Product Development Process
1. Idea Generation
II. Idea Screening
III. Concept Development and Testing
IV. Business Analysis
V. Marketing Strategy Development
VI. Product Development
VII. Test Marketing
VIII. Commercialisation
IX. Monitoring and evaluation
Session Summary
References
Introduction
Product planning is the ongoing process of identifying and articulating market
requirements and define a product’s feature set. You will understand that product
planning serves as the basis for decision about price, distribution and promotion.
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Learning Outcomes
1. Define product planning
2. Explain the concept of new product
3. Explain the process of new product development
(A) Product Planning

Product planning is the process of searching ideas for new products, screening
them systematically, converting them into tangible products and introducing
the new product in the market. It also involves the formation of product policies
and strategies.
Product planning includes improvements in existing products as well as deletion of

unprofitable or marginal products. It also encompasses product design and
engineering which is also called product development. Product planning
comprises all activities starting with the conception of product idea and ending up
with full scale introduction of the product in the market. It is a complex process
requiring effective coordination between different departments of the firm. It is
intimately related with technical operations of the organisation, particularly with
engineering, research and development departments.
ITQ: What is product planning?

ITA: Product planning is the process of searching ideas for new products, it also involves
the formation of product policies and strategies.
(B) New Product

The term new product has different meaning. It could be an original product that a
firm has just been developed through its research and development efforts. It could
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as well be products that have received improvements or modifications. According
to Kotler and Armstrong (1996), a firm can obtain new products in two ways. One
is through acquisition-by having a whole company, a patent, or a license to
produce someone else’s product. The other is through new product development
through the company’s own research and development department. A New
product therefore could be product that has undergone innovations and as
such has never been sold by any organization.
The product life cycle shows that companies cannot rely on their current products
to meet the target rate of sales and profit growth. Thus, as some of the company’s
products enter the decline stage, the company will have to take concrete steps to
replace them. This can be done either by acquisition or innovation.
ITQ: What are the two ways in which a firm can obtain new products?
ITA: Acquisition and new product development.
The introduction of new products in the market place - as a result of innovation -

constantly improves the standard of living of consumers. All the qualities of a
product, for example, benefits, packaging, distribution, names, etc., contribute to
the bundle of utility that provides satisfaction through exchange which further
enhances the consumers’ living standard.
New products are original products, product improvements, product modifications

and new brands that the firm brings into existence through its own Research and
Development (R & D) efforts. Any change in the physical feature (design, color,
size, packaging, etc), however minor it may be, creates, in effect, a new product.
A new product is, therefore, one that is new to the company, but not necessarily
new to the market where the generic product may already exist. New products can
30
be classified on the basis of how different they are from what is already in the
markets. As they are developed and produced, they progress from the idea stage to
the production and marketing stages respectively.
ITQ: What improves the standard of living of consumers?
ITA. All the qualities of a product, for example, benefits, packaging, distribution, names:
improves the standard of living of consumers.
(C) New Product Development Process

The processes involved in the development of new products are:-
1. Idea Generation. This is the stage in which efforts are made to develop a
large pool of possible product ideas. Firms vary in how they go about finding
ideas. Ideas may be generated intuitively or through special techniques. New
product ideas may come from company personnel, such as, salesmen or the
management and from customers, competitors, middlemen, trade associations,
scientists and private research organisations.
2. Idea Screening. The purpose of idea generation is to create a number of good
ideas. Once this has been done, their numbers have to be pruned to a
manageable level. In the screening stage, the company must seek to avoid two
types of errors: a drop-error, and a go-error. Product developers must,
therefore, establish a method for choosing which ideas they want to examine
more closely. Idea screening criteria include the sales volume expected, the
type and number of competitors, and the availability of raw materials.
3. Concept Development and Testing. Those ideas that survive screening

undergo further development into fully mature product concepts. It is
necessary to differentiate between a product idea, a product concept and a
product image. A product idea is a possible product, described in objective
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functional terms, that the company can see itself offering to the market. A
product image is the particular subjective picture consumers actually acquire
of the product.
The company, at this stage, tries to make the general concept of the product
more specific. After the specific concept has been developed for the new
product, it is then tested. The purpose of concept testing is to measure
consumers’ reactions to the specific product idea. Verbal descriptions or a
picture of the product could be used to ask for consumers’ candid reactions.
Marketers, at this point, want to know how they can improve the product
idea further and also who will buy it (the product).
4. Business Analysis. Once management has developed a satisfactory product

concept and a tentative marketing strategy, it is in a position to consider or
assess the business attractiveness of the product. Looking at projected sales,
costs, and profits (or losses) estimates to determine whether, they satisfy the
company’s objectives, and the economic viability of the product idea.
5. Marketing Strategy Development. The new product developer will have to

develop a preliminary concept of the marketing strategy, for introducing this
product into the market. The marketing strategy will be rough at this stage
and will be refined in subsequent stages. The marketing strategy statement
consists of three parts: describes the size, structure and behaviour of the
target market, the intended positioning of the new product in the market, and
the sales, market share and profit goals being sought in the first few years;
outlines the product’s intended price, distribution strategy, and marketing
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budget for the first year; and describes the intended long-run sales and profit
goals and marketing mix strategy over time.
6. Product Development. If the new product idea has survived to this stage, a
prototype or model of the product, (embodying all the desirable features that
will appeal to buyers), will be constructed. Marketers, at this stage, seek a
brand name to match the product, develop different packages that suit the
product and identify the major elements of the marketing mix.
Product development proceeds from design and production of the basic

product to brand naming and packaging. At each stage, consumers’ tests are
conducted to check the appeal of alternative product features, brand names
and package designs.
7. Test Marketing. This is the stage where the product and marketing program
are introduced, into more authentic consumer settings (e.g. retail stores in a
few market areas). It enable the marketer to learn how consumers and
dealers react to handling, using and repurchasing the product; and how large
the market is before making a final decision to launch it in the market place.
The reaction of the test market will indicate how well the product will be
accepted by the overall market.
8. Commercialisation. This is the final stage of product development. At this

stage, the marketers put the product into full production and choose its brand
name and package. It involves putting all the final touches to the four
components of the marketing mix. In this respect, all product modifications
and packaging must be completed, retail price and middlemen margins must
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be determined, middlemen must be selected, salesmen trained and an
advertising campaign launched.
9. Monitoring and evaluation. The launching of a new product is not an end.

There must be a time to reflect on how well the process itself has been
implemented and how successful or otherwise the customers have been.
Monitoring and evaluation relate to the process and the performance of the
product after launch. The process may be reviewed in terms of whether each
stage was given due consideration, whether the right kind of people were
involved in it, whether it needed more time or resources, whether it took
more time and resources than it needed to have done or whether the quality
of information, analysis and decision making was as high as the organisation
would wish. Taking time to address such issues might, at least, lead to a
better and more efficient new product development exercise on the next
occasion.
ITQ: What are the processes of new product development?
ITA: Idea generation, Idea screening, Concept development and testing, Business analysis,
Marketing strategy development, Product development, Test marketing, Commmercialisation,
Monetary and evaluation.
Session Summary
In this study session, the discussion was based on product planning, the concept of
new product and the product development process.
References
34
(D) Discussion Questions

1. What is Product planning? ii. What is a new product? iii. New products
have four categories. Identify and give an appropriate description of them.
2. Identify and adequately explain the eight (8) stages involved in the process
of innovation.
3. What is Test marketing? Give eight (8) definitions of what this term means
according to known scholars.
4. Identify and describe the main objectives of test marketing.
5. Identify and describe the steps involved in test marketing.
6. Identify and explain various test marketing methods.
7. What is the Customer Adoption Process? Explain the five (5) stages that are
involved in this process.
8. Identify five (5) approaches to new product development and their
advantages and disadvantages respectively.
9. Identify possible difficulties that may be encountered when a firm is test
marketing its product.
10. Discuss the need or otherwise for small manufacturing companies to develop
new products.
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9.1.2.3 STUDY SESSION 3
Product Life Cycle

Introduction
Learning Outcomes
(A) Product Life Cycle (PLC)
(B) Stages of product life cycle
* Discrete Choice Theory of Product Differentiation
* Product Category Theory
Session Summary
References
Discussion Question
Introduction
In the previous study session, you learnt the product planning which involves the
new product and new product development process. In this study session you are
going to learn the product life cycle. You
will appreciate the fact that a new product
progresses through a sequence of stages
from introduction to growth, maturity
and decline and is associated with changes
in the market situation, thus impacting the
marketing strategy and marketing mix.
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Learning Outcomes
After studying this session, you should be able to:
1. Discuss the concept of product life cycle
2. Describe the stages of product life cycle
3. Explain the discrete choice theory of product differentiation
4. Understand the product category theory.
(A) Product Life Cycle (PLC)

The product life-cycle theory is an economic theory that was developed by
Raymond Vernon, in response to the failure of the
Heckscher-Ohlin model to explain the observed pattern of
international trade. The theory suggests that early in a
product's life-cycle, all the parts and labour associated
with that product come from the area in which it was
invented. After the product becomes adopted and used in the world markets,
production gradually moves away from the point of origin. In some situations, the
product becomes an item that is imported by its original country of invention. A
commonly used example of this is the invention, growth and production of the
personal computer with respect to the United States.
The concept of the product life cycle is an attempt to recognise different stages in
the life history of a product. From the time the product is introduced to when it
is withdrawn, a product passes through the stages of growth, maturity and
decline. The actual shape of the curve and the length or duration of the four
constituent stages will, of course, vary for product or brand. They will depend on
the interaction of many variables including:-
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(i) The emergence, growth or disappearance of markets and segments.
(ii) Trends in available buyer spending capacity, real disposable income,
etc.
(iii) Technological developments, which may lengthen or shorten the life
cycle stages.
(iv) Changes in the taste and preferences of consumers or buyers.
(v) The effect of manufacturing or distribution cost changes on the price
to the consumer; and relative movements in the price of competing or
substitute products.
ITQ: Who developed the product life cycle and why?
ITA: The product life cycle is an economic theory that was developed by Raymond
Vernon, in response to the failure of the Heckscher-Ohlin model to explain the observed
pattern of international trade. The theory suggests that early in a product's life-cycle, all
the parts and labour associated with that product come from the area in which it was
invented.
(B) Stages of product life cycle

 Introduction - This is a period of slow sales growth as the product is
introduced into the market. Profits are nonexistent because of heavy
expenses of product introduction.
 Growth – this is a period of rapid market acceptance and substantial

profit improvement.
 Maturity – at this stage, there is a slowdown in sales growth because

the product has achieved acceptance by most potential buyers. Profits
stabilise or decline because of increased competition.
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 Decline – sales show a downward drift and profits erode.
ITQ: Identify the stages involved in a product’s life cycle?

ITA: There are four (4) main stages in a product’s life cycle, they include; the market
introduction stage, the growth stage, the maturity stage and the saturation or decline stage
Discrete Choice Theory of Product Differentiation

Product differentiation (in quality, packaging, design, color, and style) by Simon P.
Anderson, Andre de Palma and Jacques-Francois. This has an important impact on
consumer choice, it also provides a rich source of data that has been largely
unexplored because there has been no generally accepted way to model the
information available. This important study shows that an understanding of
product differentiation is crucial to understanding how modern market
economies function, and that differentiated markets can be analysed using discrete
choice models of consumer behaviour. It provides a valuable synthesis of existing,
often highly technical work in both differentiated markets and discrete choice
models and extend this work to establish a coherent theoretical underpinning for
research in imperfect competition.
The discrete choice approach provides an ideal framework for describing the
demands for differentiated products and can be used for studying most product
differentiation models in the literature. By introducing extra dimensions of product
heterogeneity, the framework also provides richer models of firm location.
ITQ: What is Product Differentiation?

ITA: It is the process of distinguishing a product or service from others, to make it more
attractive to a particular target market. It involves differentiating from competitors’ products as
well as a firm’s own products.
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Product Category Theory
In category theory, the product of two (or more) objects in a category is a notion
designed to capture the essence behind constructions in other areas of mathematics
such as the Cartesian product of sets, the direct product of groups, the direct
product of rings and the product of topological spaces. Essentially, the product of a
family of objects is the "most general" object which admits amorphism to each of
the given objects.
Session Summary
 The concept of the product life cycle is an attempt to recognise different
stages in the life history of a product.
 Introductory stage, growth stage, maturity stage and decline stage are the
stages of product life cycle.
 Discrete Choice Theory of Product Differentiation has an important impact
on consumer choice, it also provides a rich source of data that has been
largely unexplored
References
1. Dibb, S. S., Pride, W. M &Ferrel, O. C (2002). Marketing: Concepts and
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(C) Discussion Question
1. Explain and critique the stages of product life cycle.
2. Discuss the introductory stage of a product
3. Compare and contrast the growth stage and the maturity stage of a product
4. Which stage is the most critical stage of a product? Discuss
5. What do you understand by Discrete Choice Theory of Product
Differentiation?
6. Explain the product category theory
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Product Positioning
Introduction
Learning Outcomes
(A) Product Positioning
(B) Perceptual Mapping
* Product Repositioning
Session Summary
References
Introduction
In this study you will understand that product positioning is an important element
of a marketing plan. You will also learn that it is the process marketers use to
determine how to best communicate their product’s attributes to their target
customers.
Learning Outcomes
After studying this study session, you should be able to:
1. Define the concept of product positioning
2. Discuss what perpetual mapping is all about
3. Explain the basis for product positioning
4. Know what product repositioning is all about
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(A) Product Positioning
Product positioning is an important phase in new product development. Product
positioning refers to the decisions and activities intended to create and maintain
a certain concept of the firm’s product in customers’ minds. When marketers
introduce a product, they try to position it so that it appears to have the
characteristics that the target market most desires.
ITQ: What is product positioning?
ITA: It is a marketing strategy that aims to make a brand occupy a distinct position,
relative to competing brands, in the mind of the customer.
(B) Perceptual Mapping

A product’s position is the result of customer’ perception of the product’s
attributes relative to those of competitive brands. Buyers make numerous purchase
decisions on regular basis. To avoid a continuous reevaluation of numerous
products, buyers tend to group, or “position” products in their mind to simplify
buying decisions. Rather than allowing customers to position products
independently, marketers often try to influence and shape consumers’ concepts or
perceptions of products through advertising. Marketers’ sometimes analyse
product positions by developing perceptual maps. Perceptual maps are created by
questioning a sample of consumers about their perception of products, brands, and
organisations with respect to two or more dimensions.
To develop a perceptual map, respondents would be asked how they perceived

selected product in regard to price and the function of the product. In this way
marketers can see how their brand is perceived by the consumers.
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ITQ: What is a perpetual mapping?
ITA: It is a marketing research technique used to compare different product brands across
the two or more dimensions.
Bases for Positioning

Marketers can use several bases for product positioning. A common basis for
positioning product is to use competitors products. A firm can position a product
to compete head on with another brand, as Maggi cube has done against Royco
cube, or to avoid competition as Coca-Cola has done relative to other soft drink
producers. Head to head competition may be a marketer’s positioning objective if
the product’s performance characteristics are at least equal to those of competitive
brands and if the product is priced lower. Head to head competition positioning
may be appropriate even when the price is higher if the product’s performance
characteristics are higher.
A product’s position can be based on specific product attributes or features. If a

product has been planned properly, its features will give it the distinct appeal
needed. Style, shape, construction and color help to create the image and the
appeal. If buyers can easily identify the benefits, they are of course, more likely to
purchase the product. When the product does not offer certain preferred attributes,
there is room for another new product .Other bases for product positioning include
price, quality level, and benefits provided by the product.
ITQ: What are the basis for positioning a product?
ITA: Positioning create an image of your company’s product in the mind of your target
consumer.
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Product Repositioning
Positioning positions are not just for new products. Evaluating the positions of
existing products is important because a brand’s market share and profitability may
be strengthened by product repositioning. Repositioning can be accomplished by
physically changing the product, its price, or its distribution. Rather than
making any of these changes, marketers sometimes reposition aproduct by
changing its image through promotional efforts. Finally, a marketer may reposition
a product by aiming it at a different target market.
ITQ: What is product repositioning?
ITA: Repositioning involves changing the identity of a product relative to competing

products.
Session Summary
The discussion of this study session was based on product planning, perpetual
mapping, base for positioning of a product and product repositioning.
References
45
(C) Discussion Questions
1. What is Product positioning? Using the car industry,
describe five different brands and how they have been
positioned.
2. Describe the stages involved in positioning.
3. Draw and explain a perceptual map for a product or service.
4. Outline and discuss the factors that any company
must consider when deciding the quality of a new
product to be produced
5. What are the basis for positioning a product?
6. Discuss product repositioning
46
Branding, Packaging and Labeling

Introduction
Learning Outcomes
(A) Branding
(a) Manufacturer’s Brand
(b) Private brand
(B) Packaging
(i) The primary package
(ii) The secondary package
(iii) The shipping packaging
 Contemporary Packaging Issues
 Aseptic Packaging
 Environmental Packaging
* Cause Packaging
(C) Labeling
(i) Brand Label
(ii) Grade Label
(iii) Descriptive/Informative labels
Session Summary
References
Discussion Question
47
Introduction
In the previous study session, you learnt what is positioning of a product. In this
study session, we are going to discuss branding, packaging and labelling of
products.
Learning Outcomes
By the end of this study session, you should be able to:
1. The meaning of branding, packaging and labelling
2. Describe the types of branding
3. Explain the types of packaging
4. Describe the various forms of labelling
(A) Branding
Branding, simply, is the process in which organizations use to distinguish their
products from competitors. By developing a distinct name, packaging and
design, a brand is created. Branding permits customers to develop associations
with a brand (e.g. prestige, economy) and eases the purchase decision.
In developing a marketing strategy for individual products, the marketer is

confronted with the issue of branding. Branding is a very important aspect of
product strategy, because it adds value to the product. The marketer faces a
number of challenging decisions, if he makes up his mind to brand his products,
the key decision areas include: -
(i) Whether brand names should be used on products.
(ii) Whether brand names should be those of their firms (or
manufacturers) or those of various distributors (or intermediaries).
48
(iii) Whether the brands of the company should go under one name, a few
names or many individual names.
Sometimes, a brand name becomes so well-known and is so much associated with

a particular use that it becomes a generic name - a term associated with the product
class and not with a particular brand.
ITQ: What is branding?
ITA: Branding, simply, is the process in which organizations use to distinguish their
products from competitors.
One major way of classifying brands is on the basis of who owns them, that is,
whether they are owned by producers (national brand) or by intermediaries (private
brands).
(a) Manufacturer’s Brand: This is also called a National brand. It is owned

and controlled by a firm whose primary economic activity is production. Here,
the manufacturer is recognised as the producer of the product.
(b)Private brand: also referred to as middlemen brand, distributor brand or

dealer brand. It is the one that is owned and controlled by a firm whose primary
economic activity is distribution and not production. Here, the manufacturer
sells the product in bulk to middlemen who put on a private brand.
ITQ: What are the two types of brands?
ITA: Manufacturers brand and Private brand.
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(B) Packaging
A package is the physical container or wrapping for a product. The package is one
of the marketer’s most vital tools for selling. Packaging is the general group of
activities in product planning which involves designing and producing the
container or wrapper for a product. Many products have a distinct image in the
consumer’s mind through their packaging, thus, creating awareness.
The package attracts, communicates, presents an attractive visual appeal and serves
as the vehicle by which the brand of a product is carried through to the consumer.
The package may include up to three levels of material:
(i) The primary package: refers to the product’s immediate container. In some
cases, the primary package will remain with the product until the consumer
is ready to use it; e.g. toilet soaps, chocolate. In other cases, the primary
package is retained throughout the entire life of the product, e.g. Vaseline,
perfume.
(ii)The secondary package: this refers to additional layers of material that
protect the primary package and which are discarded when the product is
about to be used. Example, the cardboard box containing the bottle of
perfume is a secondary package and provides additional protection and
promotion opportunity.
(iii)The shipping packaging: refers to further packaging necessary for storage,
identification, or transportation, e.g. cartons, crates, etc.
ITQ: what is packaging?

ITA: it is a wrapping material around a consumer
item that serves to contain, identify, describe,
protect, display, promote and otherwise make the
product marketable and keep it clean.
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ITQ: What are the three levels of material in packaging?
ITA: The primary package, the secondary package and the shipping package.
Contemporary Packaging Issues

Product packaging offers companies unique opportunities to incorporate the latest
technologies and address lifestyle changes as well as environmental, social, and
political concerns.
Aseptic Packaging
Aseptic packaging incorporates a technology that keeps foods fresh without
refrigeration for extended periods. The process involves separately sterilizing the
package and the food product and filling and sealing the package in a sterile
environment. Canning and bottling are aseptic methods of food storage.
Environmental Packaging
Companies are trying to develop packages that respond to consumer demand for
environmentally sensitive designs. Recent public opinion surveys show more
support for less wasteful packaging. People are even willing to pay more for
products that reduce waste. In response to consumer concern, companies are
making more packages that are reusable, recyclable, and safer for the environment.
Many companies that manufacture spray products such as hair products, air
freshener, and paint have switched from using aerosol cans to pump dispensers,
which do not release ozone-destroying chlorofluorocarbons, or CFCs, into the
atmosphere.
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Cause Packaging
Some companies are also using their packages to promote social and political
causes. This practice is known as cause packaging. The issues on the packages may
be totally unrelated to the products inside. Printing messages on packages
encourages consumers to participate in or think about issues. In many ways, cause
packaging is also a company’s attempt to differentiate its products from those of its
competitors.
ITQ: Product packaging offers companies unique opportunities to incorporate the

latest technologies namely:
ITA: Aseptic packaging, Environmental packaging and Cause packaging.
(C) Labeling
Labeling is a significant means of product identification much like branding and
packaging. Labeling is the act of attaching or tagging labels to the products.
Packages and their labels should give buyers accurate and up-to-date information
as to the contents and necessary guidance regarding the use of the product.
Packaging process completes only after giving proper label to it. It means labeling
is an integral part of the packaging. In short, labeling means putting identification
marks on the package.
There are three basic kinds of labels:
(i) Brand Label- this is simply the brand alone applied to the product or
products. Example, some cloths are brand labeled e.g. wax.
(ii) Grade Label- identifies the quality of the product by a letter, number
or word; e.g. Dutch wax. Grade labels are required on meats and
many food products.
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(iii) Descriptive/Informative labels - This label gives written or illustrative
objective information about the characteristics or benefits, use,
construction, care, performance or other features of the product.
ITQ: what is labeling:

ITA: it is a display of information about a product on its container, packaging, or
the product itself. For several types of consumer and industrial products, the type
and extent of information that must be imparted by a label is governed by the
relevant safety and shipping laws.
ITQ: What are the three basic kinds of label?
ITA: (a) Brand label (b) Grade label (c) Descriptive/Informative label.
Session Summary
 Branding, simply, is the process in which organizations use to distinguish
their products from competitors.
 Types of branding are manufacturer’s brand and private brand
 A package is the physical container or wrapping for a product
 Types of packaging are primary package, secondary package and shipping
package
 Labeling is a significant means of product identification much like branding
and packaging.
 Types of labelling are grand label, grade label, descriptive/ informative
label.
References
53
(D) Discussion Question

1. Write exhaustively on the Modern history of branding.
2. Authors site a plethora of benefits that arises from branding even though
most of these are from the producers’ perspective. Identify and explain
seven (7) of these benefits.
3. Identify and describe the eight (8) steps involved in building a brand.
4. Explain exhaustively the following terms: i) brand congruity ii) brand
personality.
5. Is there any relation between self-congruity and brand personality?
6. Summarise the key differences in the explanation of branding from; a) a
cognitive point of view b) a behavioural point of view.
7. What are the relations between Brand communities, Brand subcultures and
Brand tribes?
8. What are the differences between Reference groups and Reference systems?
9. How might Elliot and Wattanasuwan (2000) and B.F Skinner differ with
respect to what nostalgia is?
10. Can anything be branded? Defend your opinion about the question.
11. Compare and contrast ‘brand mark’ and ‘trademark’. Explain the
significance of the stated variables.
12. Explain the distinctive functions of packaging and labeling
54
9.2 MODULE 2
Pricing of Products
Introduction
This module introduces you to the goals of pricing, factors that affect pricing of
products and services in an organisation and policies that guide the
pricing. The module further examines pricing strategies available at
the disposal of sellers. Pricing mathematics is part of the content of
the module.
There are a lot of theories to be discussed under the module. These include the
price theory of two-sided markets; market theory and the price system; and Stigler
price theory.

9.2.1 Objectives
1. Understand different pricing objectives
2. Examine issues unique to the pricing of products
3. Explore the possible variations of a price structure, including discounts,
allowances, and who pays transportation costs
4. Learn key factors that affect pricing decisions
5. Determine specific product price
6. Analyse demand for a product and the relationships between demands, costs,
and profits.
55
9.2.2.1 STUDY SESSION6: Goals of Pricing
Introduction
Learning Outcomes
(A) Price & Pricing
(B) Pricing Objectives
! Profit maximisation:
! Gaining market share
! Market skimming
! Sales growth
! Competitive objectives
! Maximising current revenues:
! Achieving target profits
! Gaining promotional points
(C) Setting the Price/Price Determination
1 Selecting the pricing objective.
2 Determining demand
3 Estimating costs
4 Analysing competitors’ costs, prices and offers
5 Selecting a pricing model
6 Selecting the final price
Session Summary
References
56
Introduction
This study session will educate you on goals of pricing. You will
understand that pricing goals give direction to the whole pricing
process.
Learning Outcomes
After studying this study session, you should be able to:
1. Discuss the pricing policies of a firm
2. Explain the pricing objectives
3. Describe how to set price on a product
(A) Price and Pricing

Price is the value of a product expressed in terms of currency; While Pricing is
the art of translating into quantitative terms (e.g. Naira & Kobo) the value of
the product to customers at a point in time.
From a customer's point of view, value is the sole justification for price. Many
times customers lack an understanding of the cost of materials and other costs that
go into the making of a product. But those customers can understand what that
product does for them in the way of providing value. It is on this basis that
customers make decisions about the purchase of a product. Effective pricing meets
the needs of consumers and facilitates the exchange process. It requires that
marketers understand that not all buyers want to pay the same price for products,
just as they do not all want the same product, the same distribution outlets, or the
same promotional messages.
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ITQ: What do you understand by the price of a product?
ITA: It is the value of a product expressed in terms of currency
Therefore, in order to effectively price products, markets must distinguish among

various market segments. The key to effective pricing is the same as the key to
effective product, distribution, and promotion strategies. Marketers must
understand buyers and price their products according to buyer needs if exchanges
are to occur, however, one cannot overlook the fact that the price must be
sufficient to support the plans of the organization, including satisfying
stockholders. Price charged remains the primary source of revenue for most
businesses.
(B) Pricing Objectives

In terms of pricing objectives, the firm must first establish what role(s) it wants
price to play in the business. The objectives could be in terms of profit
maximisation, gaining market share, market skimming, sales growth, competition,
maximising current revenues, achieving target profits and gaining promotional
points.
i. Profit maximisation: In profit maximisation pricing, the firm wants to
achieve maximum current profits. The intention may be to forestall losses
from a new product that is likely to be a failure in the market. It may also be
used for a product at its decline stage.
ii. Gaining market share: Market share pricing has as its objective, the
maximisation of market share penetration. The intention is that high
production volume will reduce costs and eventually give the firm desired
profits in the long run.
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iii. Market skimming: In market skimming, the firm wants to serve those
customers or buyers who are ready to pay a much higher price than others in
the aggregate market. This is because the product has high present value to
them.
iv. Sales growth: One major sales objective of most firms is sales growth.
Most firms determine prices after a careful consideration of the projected
sales growth. Sales growth and expansion, however, bring increased
complexity, greater responsibility and more problems. To avoid these
problems and the consequences therefore, companies aim at maintaining
sales. Another alternative is the strategy of growth and maintenance of
market share. This ensures that the company continues to hold its market
share. To maintain the same share percentage, the company has to generate
increased sales from the enlarged market potentials.
v. Competitive objectives: Some firms consciously price their products to
meet or prevent competition. In some industries, there may be a definite
price leader. The other companies simply follow the leader in setting prices.
Under certain conditions, a company may enter a market with extremely low
prices in order to discourage competition.
vi. Maximising current revenues: In current revenue pricing, what the firm
seeks to do is to maximise current sales revenue. Firms that have cash flow
problems or those that are uncertain of the future of the market for the
product use this.
vii. Achieving target profits: Target profit pricing is a situation where the firm
wants to achieve a certain rate of return on investments, which it considers
satisfactory when compared with the level of investment and risks taken.
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viii. Gaining promotional points: Promotional pricing involves pricing a
popular product at either a low price or high price to attract buyers who may
eventually buy other products in the company. It could enhance the quality
image of the product line respectively.
ITQ: What are the pricing objectives?
ITA: Profit maximisation, gaining market share, market skimming, sales growth,
competitive objective, maximising current revenue and achieving target profit.
(C)Setting the Price/Price Determination

A firm must set a price when it develops a new product, when it introduces its
regular product into a new distribution channel or
geographical area, and when it enters bids on new contract
work. The firm must decide where to position its product
on quality and price. In determining the price of a product,
the firm must consider many factors:
i. Selecting the pricing objective. The five major pricing objectives are
survival, maximum current profit, maximum market share, maximum market
skimming and product-quality leadership.
ii. Determining demand. Such price leads to a different level of demand and
will, therefore, have a different impact on a company’s marketing objectives.
iii. Estimating costs. Costs set the base for price setting. Costs take two forms:
fixed and variable. A company charges a price that covers its cost of
producing, distributing and selling the product, including a fair return for its
effort and risk.
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iv. Analysing competitors’ costs, prices and offers.
v. Selecting a pricing model. This includes mark-up pricing, target-return

pricing, perceived-value pricing, value pricing, going-rate pricing and
action-type pricing.
vi. Selecting the final price. In selecting the price, the company must consider
the impact of other marketing activities, company pricing policies, gain-and-
risk-sharing pricing and the impact of price on other parties.
ITQ: What factors do you think a firm should consider in determining the price of
the product?
ITA: They are: Selecting the pricing objective, Determining demand, Estimating
cost, Analysing competitors cost, prices and offers, Selecting a pricing method and
Selecting the final price.
Session Summary
This study session discussed the goals of pricing whereby price and pricing issues,
pricing objectives, setting price / determination was discussed.
References
61
(D) Discussion Question
1. Identify and explain the four types of objectives that pricing decisions can
help achieve.
2. Identify and explain the factors affecting pricing decisions.
3. i. Write exhaustively on the following cost concepts, namely: fixed costs,
variable costs, marginal costs, total cost.
ii. What is marginal cost pricing?
4. Explain the following concepts:
i) Cost-based pricing ii) Target return on investment pricing iii)
Experience curve pricing iv)Demand-based pricing.
5. A sophisticated form of demand-based pricing is Psychological pricing.
What does it mean, give three (3) examples of it.
6. Write extensively on Competition oriented pricing.
7. The following are special pricing incentives used to encourage the sale of
industrial goods namely: i. Cash discounts ii. Seasonal discounts iii.
Allowances iv. Geographical pricing. Write extensively on them.
8. Explain what you understand by price elasticity of demand. Give examples
of elastic and inelastic products or services, discussing how the concept
might be used in marketing situations.
9. Why must marketers consider consumers’ perceptions of value for money
when setting prices?
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Pricing Factor
Introduction
Learning Outcomes
(A) Factors Affecting Pricing Decisions
(B) Internal Influences on Pricing Decisions
i Organisational objectives
ii Marketing objectives
iii Costs.
(C) External Influences on Pricing Decision
i. Customers and consumers
ii. Demand and price elasticity
iii. Channels of distribution
iv. Competition.
v. Legal and ethical constraints
Session Summary
References
Discussion Question
Introduction
In the last study session, we had a discussion on the goals of
pricing. In this study session, you are going to be introduced to
the pricing factors. You will understand that there are both
internal and external factors that affect the pricing decisions.
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Learning Outcomes
1. Understand generally the factors that affect the pricing decisions
2. Explain the internal influences on pricing decisions
3. Discuss the external influence on pricing decisions.
(A)Factors Affecting Pricing Decisions

The complexities of the marketing environment and the human perceptions of the
parties involved in the marketing exchange affect pricing. Some of the issues
affecting pricing decisions are internal to the organisation while others are
external.
(B) Internal Influences on Pricing Decisions

Pricing is influenced by various internal factors. Pricing needs to reflect both
corporate and marketing objectives as well as being consistent with the marketing
mix elements. The internal factors affecting price are:
i. Organisational objectives. These are linked with corporate strategy.
Marketing plans and objectives should reflect the aspirations of the
organisation and satisfy the customer’s needs and wants. Organisational
objectives such as target volume sales, target value sales, target growth
in various market segments and target profit figures can be made more
or less attainable, through the deployment of the marketing mix and
particularly, through price.
ii. Marketing objectives. Marketing and organisational objectives are closely
interrelated and influence each other to a great extent. While organisational
objectives relate primarily to the operation, the well-being and the
personality of the organisation as a whole, marketing objectives are more
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closely focused on specific target markets and the position desired within
them. Marketing objectives are achieved through the use of the whole
marketing mix.
An organisation may have a portfolio of products serving different segments,

each of which require a different approach to pricing. The product lifecycle
concept (PLC) also influences the pricing of a particular product over a
period of time. Other elements of the marketing mix should be used to
support price or to provide a rationale for it.
iii. Costs. Price is primarily related to what the customer will be prepared to
pay for a particular product offering. The actual cost of providing that
offering should be considered. The cost of providing the product, therefore
constitutes the base on which the product can be sold profitably. The price
has to stand in a competitive and unpredictable environment, and may have
to be flexible enough to be used as a competitive weapon or as a
promotional tool to maintain volume of sales.
The concept of joint or shared costs that are divided between a number of
products produced by an organisation is an important dimension of cost. Price
is a reflection of the provision for R & D facilities, maintenance, quality
assurance and administrative costs. Costs, therefore, play an important role
in price setting.
ITQ: The complexity of the marketing environment and the human perceptions affect
pricing. What are those internal influences of pricing decisions?
ITA: The internal influences of pricing decisions are: (a) organisational objective (b)
marketing objectives (c) cost objectives.
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(C)External Influences on Pricing Decision
The external factors that affect pricing decisions are:
i. Customers and consumers. Pricing cannot be considered without taking
into account the feelings and sensitivities of the end buyer. Different
market segments react to price levels and price changes differently
depending on the nature of the product, its desirability and the level of
product loyalty established. The marketer must be careful to set prices
within an area bounded at the top by what the market will tolerate.
ii. Demand and price elasticity. Customers’ attitude toward price and their
responsiveness to it are reflected to some extent in economic theories of
demand. Marketers’ pricing objectives and the estimation of demand are
thus very closely linked. As pricing objectives change, the nature and size
of potential demand will also change. It is important for the marketer to be
able to estimate demand for a new product. In doing this, he must consider
the increase or decrease in demand, changing consumer tastes and needs,
ability and willingness to pay, fluctuations in real disposable income and
availability and pricing of close substitute products.
Marketers need to understand the sensitivity of demand to price changes. For

some products, all other things being equal, leads to a big change in demand.
However, changes in the price of some essential products, such as
electricity, do not lead to big changes in demand. In this case, demand is said
to be inelastic because it does not stretch a lot if pulled either way by price.
The term price elasticity of demand thus refers to the ratio of percentage
change in quantity over percentage change in price.
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Price elasticity = % change in quantity demanded
--------------------------------------------
% change in price
Thus, the higher the price elasticity of demand, the more sensitive the
market will be. The three possible forms of elasticity are elastic demand,
inelastic demand and unitary demand.
iii. Channels of distribution. The needs and expectations of the other members
of the distribution chain must be taken into account in pricing decision. The
desired level of profit margin, a requirement to cover the costs associated
with handling and reselling the product such as transport, warehousing,
commission, insurance, retail display, staffing and administration having
impact on the price of the product or service.
iv. Competition. Pricing decisions must be made in a competitive context. The

level and intensity of competition and the pricing decisions that other
organisations make in the market will influence any producer’s own pricing.
Pricing relates to positioning the product and concerns strategic decisions
about the extent to which the organisation wants to use price as an
aggressive competitive weapon. The influence of competition on price will
depend on the nature of the product and the number and size of competitors
within the market.
v. Legal and ethical constraints. Prices must be set within the legal
framework existing at the time. Laws that affect prices may be passed to
pursue a national economic objective, such as to curb inflation; protect the
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consumer from exploitation; and promote competition among producers.
The legal constraint limits the decision maker’s price alternatives. Some
industries are directly regulated when the products or services they provide
are of vital importance in the economy.
The ethical constraints borders on what price is reasonable or which price

generates too much profit. The problem here is always how to draw the
dividing line or finding at what point price becomes unreasonable.
ITQ: What are those external influence(s) of pricing decisions?
ITA: External influences are (a) customers and consumers (b) demand and price
stability (c) channel of distribution (d) competition (e) legal and ethical constraints.
Session Summary
 The complexities of the marketing environment and the human perceptions
of the parties involved in the marketing exchange affect pricing.
 Internal factors that affect price decisions are: organizational objectives,
marketing objectives and cost.
 External factors that affect pricing objectives are: demand and price stability,
legal and ethical constraint, channel of distribution, competition.
References
68
(E)Discussion Question
1. Discuss how family and household influence the choice of a consumers'
purchase.
2. What factors must be taken into consideration when adopting a marketing-
oriented approach to pricing?
3. What are the internal factors that influence the pricing decisions?
4. Discuss the external influence on pricing decisions
5. What are the factors affecting the pricing decisions?
6. Discuss the legal and ethical constraint, how do they affect the pricing
decisions?
7. How does the organizational objectives affect the pricing decisions?
8. Discuss how the channel of distribution affect the pricing decisions
9. Explain the marketing objectives and how they affect the pricing decisions
10. What do you understand by competition, hoe do they affect the pricing
decisions?
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Pricing Policies
Introduction
Learning Outcomes
(A) Pricing Policy
(B) Key Terms Associated with Pricing of Industrial Products
i. Trade Discounts
ii. Quantity Discounts
iii. Cash discount
iv. Geographical Pricing
 Ex-Factory
 FOR Destination or FOB Destination
Session Summary
References
Discussion Question
Introduction
In the previous study session, you learnt how the internal and external factors
affect the pricing decisions. Pricing policies is the topic for discussion in this study
session, you will understand that pricing policy is the policy by which a company
determines the wholesale and retail prices for its product and services.
Learning Outcomes
1. Discuss the pricing policy
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2. Explain the key terms associated with pricing of industrial products.
(A) Pricing Policy

In setting pricing policy, a company follows a sequential procedure. Prices are
often set to satisfy demand or to reflect the premium that consumers are
willing to pay for a product or service. Companies usually set a pricing structure
that reflects variations in geographical demand and costs, market-segment
requirements, purchase timing, order levels and other factors. Both internal and
external factors influence pricing decisions.
Pricing is a broad area and covers anything of value that is given in exchange for
something else. Price is a blanket term to cover a variety of
labels and is a key element in the marketing exchange. Price
communicates to the market the company’s intended value
positioning of its product or brand. A well-designed and
marketed product can command a price premium and reap big
profits. Price remains a critical element of the marketing mix despite the increase
role of non-price factors of modern marketing.
ITQ: What is pricing policy?
ITA: Pricing policy is the policy of a company or business that guides the price setting
of its goods and services that are offered for sale.
Pricing policies and strategies guide and inform the pricing decision, providing a
framework within which decisions can be made with consistency and with the
approval of the organisation as a whole. Policies and strategies help to specify the
role of pricing and its use in the context of the marketing mix. Line managers or
sales representatives need sufficient rules to maintain a consistent corporate image
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before the market, without being unduly restricted. Policies and strategy guidelines
may be necessary in deciding whether or not to reduce product price or sell the
product benefits responding to a competitive price threat in a mass market, setting
prices for re-launched products, modifying price in accordance with prevailing
environmental conditions, using price with other marketing mix elements and
using price across the product range to achieve revenue and profit targets.
ITQ: What factors guide and inform the pricing decision of a company?
ITA: Pricing policies and strategies.
(B) Key Terms Associated with Pricing of Industrial Products

List price: List price is a base price or the basic price of a product consisting of
various sizes or specifications. It is the published statement of basic prices
which is sometimes distributed to the customers. The list price statement
indicates the effective date of its applicability and mentions the extra charges for
optional product features, the excise duty, freight, sales tax, octroi, and transit
insurance. The net price is worked out based on list price less discounts or any
other concessions. The net price is most important to the organizational buyers
because that is the price which is applicable to the industrial buyer after subtracting
discounts and concessions.
 Trade Discounts: The trade discounts are offered to

the intermediaries such as dealers and distributors. The
amount of trade discount depends on the particular industry
norms or the functions performed by the intermediaries.
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 Quantity Discounts: A quantity discount is granted to industrial customers
who buy large volumes. It is a price reduction given by subtracting the volume
discount from the list price. The quantity discounts are justified as they reduce the
cost of selling, inventory carrying, and transportation. The quantity discounts are
given either on individual orders or on a series of orders over a
longer period of time, usually one year. The basic idea behind
offering quantity discount is to encourage customers to buy
larger quantities and to maintain their loyalty. The decision on
the amount of quantity discount depends on demand, costs, and competition
analysis.
 Cash discount: To ensure prompt payments cash discounts are offered to
customers in industrial marketing. It is discount
applicable on the gross amount of the bill, provided
customer pays the bill within the stipulated period from
the date of invoice.
 Geographical Pricing: Geographical pricing refers to the location at which

the price is applicable. Geographical pricing strategy is influenced by a
number of factors such as the location of the
company‘s plant, the location of the competitors’
plants and their pricing strategies, dispersion of
customers, extent of transport costs, demand and
supply conditions and competitive environment. In
geographical pricing, there are generally two methods of price basis which
are stated in the offers or quotations submitted by a seller to a buyer. These
are: Ex-factory and FOR destination.
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 Ex-Factory:-“Ex‐factory” means the prices prevailing at the factory gate.
When a seller quotes to a buyer ―ex-factory price‘, it means that the freight
and transit insurance costs are to the buyer‘s account. In other words, the
seller will charge the costs of freight and insurance to the buyer. The more
distant customers’ landed costs are higher because of freight cost.
 FOR Destination or FOB Destination: - When a seller quotes to a buyer

“FOR destination or FOB destination” (free on road/free on board
destination), it means the freight costs are absorbed by the seller or included
in the quoted prices. However, transit insurance costs, which are small
amounts, are generally absorbed by the seller, but sometimes the goods are
dispatched under the open insurance policy of the buyer. In this method of
price basis, all the customers get the product at the same price irrespective of
their locations from the seller‘s factory premise. If the quotation or the price
list is on FOR destination basis, generally the industrial marketer estimates
the average freight and insurance costs and adds the same to the basic
product prices. Absorbing these costs is rarely done by a seller; it is done
only in an intense competitive situation to get business from a particular
customer.
ITQ: What are the key terms associated with pricing of industrial products?
ITA: List price, Trade discount, Quantity discount, cash discount and
geographical pricing.
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Session Summary
Pricing policy was the topic for discussion in this study session. Key terms
associated with pricing of industrial products which involved list price, Trade
discount, Quantity discount, cash discount and geographical pricing.
References
(C) Discussion Question

1. What is pricing policy? Write extensively on the considerations involved in
formulating a pricing policy.
2. Identify the objectives of pricing policy.
3. Write extensively on the factors to be considered in
determining the prices of a product.
4. Why should a manufacturer offer a rebate instead of
lowering the suggested list price?
5. What type of geographic pricing policy is most appropriate for (a) a
chemical by-product, (b) tricycles, and (c) rebuild auto parts?
6. What is price adjustment? What three reasons generally prompt price
adjustments? Use Dangote food products to illustrate the many ways it can
adjust its prices downward for its customers by way of discounts.
7. What is pricing policy, what should a company put into consideration before
setting a pricing policy?
8. Discuss the key terms associated with pricing of industrial products.
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Pricing Strategies
Introduction
Learning Outcomes
(A) Pricing Strategy
i. Introductory Stage Pricing Strategy
* Penetration Strategy
* Skimming Strategy
ii. Growth Stage Pricing Strategy
iii. Maturity Stage pricing strategy
iv. Decline Stage Pricing Strategy
(B) Cost Analysis
Classification of Costs/Types of Costs
1. Fixed costs
2. Variable costs
3. Total costs:
4. Semi variable costs
5. Direct costs:
6. Indirect costs
7. Allocated costs:
Session Summary
References
76
Introduction
In this study session you are going to learn the pricing strategy of a firm. You will
understand that pricing strategy refers to the methods companies use to price their
products or services.
Learning Outcomes
After this study session, you should be able to:
1. Understand the pricing strategy of a company
2. Understand how company’s identify and classify the cost for making
profitable pricing decisions.
3. Explain the types of cost as discussed in the study session.
(A) Pricing Strategy

Pricing strategies guide and inform the pricing decision, providing a framework
within which decisions can be made with consistency and with the approval of the
organisation as a whole. Strategies help to specify the role of pricing and its use
in the context of the marketing mix. Line managers or sales representatives need
sufficient rules to maintain a consistent corporate image before the market, without
being unduly restricted. Strategy guidelines may be necessary in deciding whether
or not to reduce product price or sell the product benefits responding to a
competitive price threat in a mass market, setting prices for re-launched products,
modifying price in accordance with prevailing environmental conditions, using
price with other marketing mix elements and using price across the product range
to achieve revenue and profit targets.
ITQ: Identify one importance of strategy
ITA:Strategies help to specify the role of pricing and its use in the context of the marketing
mix.
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After the analysis of pricing objectives, demand, costs, competition and
government regulations, the appropriate pricing strategy should be formulated by
the company. Pricing strategies vary as the product moves through its life cycle.
The pricing strategy is a key factor in each of the four cells of Product Life Cycle.
 Introductory Stage Pricing Strategy: There are two pricing strategies

available for a new product which is in the introductory stage of its life
cycle. These are: Penetration Strategy and
Skimming Strategy. A company must analyze
the price from the angle of the buyers. How soon
the firm should try to recover the investment on
the new product is another important factor to be considered by the
company.
 Penetration Strategy: When the price elasticity of demand is high or the

buyers are highly price sensitive, strong threat exists from potential
competitors and opportunity exists to reduce the unit cost of production and
distribution with increase in volumes, the penetration strategy is effective.
The firm can draw on experience curve effect and can also achieve the
economies of scale. This would give the company a strategic advantage of
cost leadership over the competitors. The firm can adopt the pricing
objective of long term profit through large market share instead of short term
profit objectives.
 Skimming Strategy: For distinctly new product meant for a market segment
that is not sensitive to the initial high price, the skimming strategy can be
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adopted. The greatest advantage of this strategy is that, it focuses on
recovering the investment at an early stage by generating more profits. The
price will be reduced at the latter stages to reach other market segments that
are more sensitivity to price. The limitation of the skimming strategy is that
more competitors are attracted due to high profits. The products that are
distinctive with sophisticated technology and capital intensity are suitable to
adopt this strategy.
 Growth Stage Pricing Strategy: As the new competitors enter the market
and more customers start using the product at
growth stage the company face the pressure of
reducing the prices below the introduction stage. At
this stage the company focuses its attention on
product differentiation, product line extension and
building new market segments at this stage. As more suppliers enter the
market, the buyers follow the purchasing policy of buying from more than
one supplier. Therefore, the innovator firms are under the pressure to reduce
the price.
ITQ: What is the advantage and limitations of skimming strategy?

ITA: The advantage is that, it focuses on recovering the investment at an early stage by
generating more profits. The limitation of the skimming strategy is that more
competitors are attracted due to high profits
 Maturity Stage pricing strategy: The competitors are

very aggressive in the maturity stage. The company has
to cut into competitors’ market share to increase sales
volume. By adopting the low price strategy to match
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the competitor’s prices the company can achieve the high volume of sales.
 Decline Stage Pricing Strategy: At the decline stage the company has a
wide choice of pricing strategies subject to certain conditions. The firm need
not cut the price but reduce the cost to earn sum
profits provided it has built a reputation of high
product quality and dependable services. Another
major strategy is to reduce the prices to increases
sales volume above breakeven volume of sales and use the product to help
sell other products in the product mix.
(B) Cost Analysis

Pricing strategy or decision of a company must consider the costs involved.
Generally the total cost consists of the variable cost and fixed costs for a given
level of output. Some of the cost elements vary over a period of time; other cost
elements fluctuate with volume. The cost data are relevant to the pricing decisions.
The company must identify and classify the cost for making profitable pricing
decisions. The classification of costs and their description is given below for better
understanding of the cost concept.
Classification of Costs/Types of Costs

1. Fixed costs: Costs that do not vary with production or sales.
Examples are rent, interest charges, and managerial salaries. Fixed costs or
overheads are incurred irrespective of production levels or sales volume.
2. Variable costs: Costs that vary in direct proportion to the levels of

production. Examples are raw materials and direct labour costs. They are
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called variable because the total variable cost varies with the number of units
produced.
3. Total costs: Sum of the fixed and variable costs for any given level of
production are called fixed costs.
4. Semi variable costs: Costs that vary with changes in output but not in
direct proportion to quantities produced. Examples are equipment repair and
maintenance costs. Semi variable costs have components of both fixed and
variable costs.
5. Direct costs: Fixed or variable costs that are incurred directly for a
specific product or sales territory. Examples are selling expenses, freight,
and raw material.
6. Indirect costs: Fixed or variable costs that can be traced indirectly to

sales territory for a product. Examples are production overhead and quality
control that are indirectly assigned to a product.
7. Allocated costs: Costs that support a number of activities but cannot be

objectively assigned to a specific product or a market. These costs are
usually allocated across business groups or divisions by some arbitrary
criterion. Examples are administrative overhead and corporate advertising.
ITQ: Mention the types of cost
ITA: Fixed cost, Variable cost, Total cost, Semi variable cost, Direct cost, Indirect
cost and Allocated cost.
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Session Summary
In this study session, pricing strategy was discussed, pricing strategy key factor in
factor in each of the four cells of product life cycle (introductory stage, growth
stage, maturity stage and decline stage) was also discussed.
References
(C)Discussion Questions
1. Distinguish between leader pricing and bait pricing. What do they have in
common? How can their use affect a marketing mix?
2. Explain how experience curve pricing differ from average-cost pricing.
3. What is the difference between price discount and price discrimination?
4. Why do most demand curves demonstrate an inverse relationship between
price and quantity?
5. Explain why optimum profits should occur when marginal cost equals
marginal revenue strategies? Give a detailed explanation of this concept.
6. Differentiate between High-low pricing and Limit pricing.
7. Differentiate between Margin-cost pricing Market-oriented pricing.
8. Write on the nine laws of price sensitivity and consumer psychology.
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9.3 MODULE 3
Distribution and Promotion
Introduction
The module discusses the role of each key player (a channel member) plays in the
distribution of products and services. It considers
activities necessary for the purpose of planning,
implementing, and controlling the efficient flow of
raw materials in-process inventory, and finished
goods from point of origin to point of consumption.
The module concludes with discussion on the means of
providing information to buyers to arouse demand and to differentiate the product
in order to stabilize sales and x-rays its elements.
According to Bucklin 1967; Cox 1959; Ghosh and McLafferty 1982; Mulhern
1997 scholars motivated by the importance of store location and customer
convenience as key elements of marketing strategy, have developed models to
guide optimal location decisions for retailers and service providers. Early models
use regression analysis to determine store locations (Lord and Lynds 1981), while
later models also incorporated insights from game theory and decision theory (e.g.,
Davis 2006; Ghosh and Craig 1983, 1986). More recently, Chan, Padmanabhan,
and Seetharaman (2007) estimated an econometric model that incorporates the
geographic location of retailers and models the price competition among them to
determine consumer policy implications.
Empirically, models have been developed to incorporate the spatial variability in

customer tastes when determining store locations (Donthu and Rust 1989; Mittal,
Kamakura, and Govind 2004; Rust and Donthu 1995). Thus, in marketing, there is
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a rich tradition of examining retail locations from the retailers’ or customers’
perspective. However, the location choices made by manufacturers to support
retailer networks have received relatively little attention in the marketing literature.
Yet, it is well known that manufacturer decisions can have a critical effect on the
marketing success of downstream retailer partners (Iyer and Bergen 1997;
Kadiyali, Chintagunta, and Vilcassim 2000;Murry and Heide 1998). This is the
focus of the current research.
The field of location analysis has been extensively studied(Brandeau and Chiu
1989; Daskin1995).The location and allocation decisions in supply chain network
design, including the choice of the number, site and capacity of facilities, as well as
assigning customers to these facilities, have significant long-term impact on the
efficiency of the network, model formulation and solution. Algorithms that address
these issues vary widely in terms of fundamental assumptions, mathematical
complexity, and computational performance.

9.3.1.Objectives
1. Understand the marketing channel concept and the nature of marketing
channels
2. Examine different types of channels
3. Know why some firms use direct channel systems
4. Understand integrated marketing concepts
5. Learn the objectives of promotion
6. Understand elements of the promotional mix
7. Learn the factors that influence the selection of promotional mix ingredients
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9.3.2.1 STUDY SESSION10: Channel Members
Introduction
Learning Outcomes
A) Physical Distribution
(B) The Nature of Distribution Channel
(C) Factors that Affect the Selection of Channels of Distribution
i. Company
ii. Competition
iii. Environment
iv. Product characteristics
v. Customer:
(D) Physical distribution impact on middlemen
i. Develop proper MIS system
ii. Standardise the procedure
iii. Integration:
(E) Manufacturer and Distributor – Partners in progress
Session Summary
References
Introduction
Channel members is the topic for discussion in this study session. You are going to
learn the nature of distribution channel, the factors that affect the channel of
distribution physical distribution impact on middle men and also manufacturers
and distribution (partners in progress).
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A) Physical Distribution
Physical distribution can be defined broadly or narrowly, depending on the
marketing context within which it functions. It involves the actual movement and
the storage of goods after they are produced and before they are consumed. Its
goal is therefore to get the right goods to the right places at the right time for the
least cost.
It is very important that a distribution channel is properly aligned to satisfy the

needs of channel members and also for the success of any marketing strategy. A
good distribution channel creates the communication and physical supply linkages
with existing and potential customers. Channel designing is a dynamic process that
consists of either developing the new channels or modifying the existing ones.
ITQ: What is physical distribution?
ITA: It involves the actual movement and the storage of goods after they are produced
and before they are consumed.
(B) The Nature of Distribution Channel

There are several different methods of channeling the products and services to
consumers. The type of product, the selling price of the product and technical
knowledge required to sell the product all play a
considerable role in selecting the proper sales or
distribution channel. The consumer organisations carry
on certain important functions till the products reach
the consumers – like utilizing the services of
transportation companies for distribution, the services of warehouses for safe
storage of goods, inventory control, order processing and selection of marketing
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channels. This necessitate taking important decisions like devising effective
communication tools, planning promotional activities, managing finances e.t.c that
help in serving the consumers better. The nature of consumer distribution channel
is quite different from the industrial goods distribution channel.
(C)Factors that Affect the Selection of Channels of Distribution

Marketer s develop channel keeping into consideration various constraints like the
company, competition, the environment, product characteristics and the level of
service output desired by the target consumers.
 Company: If a company has financial limitation as constraint, then it may

restrict its direct distribution approach through company sales force to few
high potential consumers.
 Competition: If a competitor has been very successful through direct service

then it may force all other firms also to adopt the same strategy of direct
selling.
 Environment: Economic conditions, legal regulations are the environmental

factors that affect channel design. During recession, producers use
economical ways to sell the products to avoid additional costs. Similarly, the
law looks down upon those channel arrangements that tries to build a
monopoly market or minimize competition.
 Product characteristics: As already mentioned, complex and non-standard

products require direct distribution without any intermediaries. Eg. If a
company is providing customised product to his customer, then he deals
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directly with him rather than involving any intermediary to understand the
customer needs better.
 Customer: Companies depends on intermediaries to offer services to

customers who are either giving less business or are located at far-off places
and prefers to serve the nearby or high potential customers by themselves.
ITQ: What are the factors the affect the channel of distribution
ITA: company, competition, the environment, product characteristics and consumers.
(D) Physical distribution impact on middlemen

An ineffective performance of physical distribution system will impact the
operations of the intermediaries. This needs to be well understood by the company
who have to plan accordingly to avoid such inefficiencies. For instance, delaying
the delivery of products will result in intermediary trying to avoid the
manufacturer‘s products and searching for another company. This leads to slow
down of business and customer dissatisfaction. Therefore, the marketer needs to
take several steps as given below that would help him to improve the physical
distribution system.
 Develop proper MIS system: The marketer should create online network
with his distributor through the use of information technology tools that
helps him to know the inventory levels and provide more stock on time.

 Standardise the procedure: He should try to standardize the various
activities and operational procedures involved like product packing,
handling of materials etc., at all the organisations of the channel members.
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This helps to improve the overall operational efficiency and also brings in
consistency within the system.
 Integration: The marketer should properly integrate the physical distribution

with the channel members that helps to improve the overall marketing
effectiveness. For example, the shipment consolidation programs where the
distributors in particular area are encouraged to place all their orders on the
same day or transport their orders through a common truck.
ITQ: Identify ways in which the physical distribution system can be improved.
ITA: Develop proper MIS system, standadise the procedure and integration
(E) Manufacturer and Distributor – Partners in progress

Though there would be lot of conflicts and disputes existing between the
manufacturer and the distributor, both need to maintain good relationship that
help them to be partners in progress. The manufacturer should provide the
distributor with all the assistance that is economically feasible to enhance the
distributor‘s performance. The assistance from the manufacturer could be in the
form of –
 Providing increased margins or financial help that stimulates the distributor
to increase inventory levels
 Improving distributor‘s performance through deploying its sales force where
supplemental technical support can be provided or joint sales calls can be
done
 Imparting technical and general training to the distributor personnel to
improve their effectiveness and strengthen the bond
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Simultaneously, the distributors should also execute all their basic functions and
meet their responsibilities (which will be discussed in the subsequent session) in a
systematic way that would help the manufacturer perform better. In addition, they
should recognise the significant trends unfolding in the industry by understanding
the market dynamics and forecasting its future directions. Eventually, the efforts of
both the ‘partners in progress’ should be to grow together that can happen only
through mutual coordination and understanding each other in a better way.
Session Summary
In this study session, you learnt the concept of physical distribution, the nature of
physical distribution channels, factors that affect the channel of distribution as well
as physical distribution impact on middle men.
References
(F) Discussion Questions

1. What are distribution channels? Describe the nature of channels of
distribution.
2. A number of factors affect the selection of channels distribution, namely:
i. Customer characteristics ii) Product characteristics iii) Company
characteristics. Explain these robustly.
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3. The selection of the distribution channel and the intermediaries to use are
influenced by; i) the characteristics of the environment in which the firm
operates, ii) the competitor approaches to distribution, iii) the type of
intermediaries that operate within a channel. Explain these appropriately.
4. Explain Industrial marketing channels with the aid of a detailed diagram.
5. i) Explain the concept of Vertical Marketing Systems. ii) Identify and
explain three types of vertical marketing systems.
6. Who are intermediaries within channels of distribution? Discuss the types of
intermediaries used within channels of distribution namely: a) sales agents
b) Distributors c)wholesalers d) retailers e) franchising.
7. Identify the advantages that could accrue when retailers use franchise
agreements.
8. How are the channels used for consumer goods likely to differ from those of
industrial products?
9. Elaborate the buying decision process.
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Physical Transportation
Introduction
Learning Outcomes
(A) Components of the Physical Distribution System
i. Order Processing
ii. Warehousing
iii. Inventory
iv. Transportation / Mode of Transportation
 Rail
 Water
 Truck
* Pipeline
(B) The Functions and Responsibilities of Distributors
Session Summary
References
Introduction
In the previous study session, the nature of channel of
distribution was discussed. This study session introduce
you to the physical transportation and also the functions
and responsibilities of distributors.
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Learning Outcomes
1. Discuss the components of physical distribution system
2. Describe the elements that affect the decision making in transportation
3. Explain the functions and responsibilities of distributors.
(A) Components of the Physical Distribution System

Physical distribution is seen to consist of four major components. These four
elements are inter-related, and what is done in one area affects decision making in
others. These are:
 Order Processing: This involves receiving, recording, filling and
assembling orders for shipment. Here management is concerned about
whether the orders are properly filled, quality control and time taken to fill
and dispatch orders.
 Warehousing: To be efficient in meeting consumer demand and responding
to competition, every company must establish warehouses at various
locations. Some of the company’s stock will be kept near the plant while the
rest will be located in some rented warehouses.
 Inventory: inventory levels represent another major type of physical
distribution decision affecting customer transaction and satisfaction. It
would look or seem advisable to carry enough inventory to fill all customer
orders immediately.
 Transportation / Mode of Transportation: Transportation decisions are
important to the marketer. The type of transportation a company chooses
will affect the price of its products, its on-time-delivery performance, and
the condition of goods when they arrive. These results also affect
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consumers’ attitude towards the company. The most common modes of
transportation include the following:
 Rail: Railroads are cost-effective for shipping Car Load (C.I)
quantities, bulk products – coal, sand, minerals, farm and forest
products – over long distances as oppose to shipping Less than Car
Load (L.C.L)
 Water: This means of transportation is very low in cost in shipping
low value and non-perishable products.
 Truck: Trucks are efficient mode of transportation for short hands of
high value merchandise. Motor trucks account for the largest portion
of intra-city as oppose to inter-city transportation.
 Pipeline: Pipelines are a
specialised means of shipping
petroleum and chemicals from
sources to markets. They are
less expensive means of
shipping petroleum than rail
although more expensive than water shipment.
 Air: Air carriers transport fewer goods than any of the above. Their
rates are also higher. Airfreight is an ideal transportation mode where
speed is called for, and distant markets have to be reached.
ITQ: What are the four elements that are interrelated with each other which affect
decision making in transportation?
ITA: Order processing, Ware house, Inventory and Mode of transportation.
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(B) The Functions and Responsibilities of Distributors
Nothing prevents a producer from meeting his customers directly and effecting
sales than distribution. If he does not use this privilege, he has to borrow the
services of different middlemen who act as a vital link in the distribution network
to pass on the production to the actual users. A full function intermediary or the
distributor performs all or most of the distribution functions like –
 Purchasing products from the producer to resell back to the buyers
 Promoting the product through ads, negotiating by offering discounts and
securing orders from customers
 Extending credit to customers while reselling the products
 Storing the products safely at warehouses and ensuring its availability to the
customers
 Inspecting and testing the product, and assigning distinct quality grades.
(Various grades of products are sold to different end users at different prices)
 Transporting the product from warehouses to customers‘ place
 Providing information on product features, price etc., to the customers and
competition, market demand etc., to the manufacturers.
 Providing pre-sales and after-sales services to the customers through their
technical service personnel.
As the intermediaries perform all or most of the above functions, company find it
more suitable to use their services rather than doing all the things by themselves.
But, they should analyse certain functions that are very important for them but
cannot be performed effectively due to reasons like cost effectiveness or service
inefficiency. Such tasks should be outsourced to those intermediaries who have
the expertise to perform them effectively and efficiently.
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ITQ: What are the functions of distributors?
ITA: The distributors perform a number of functions to make possible the flow of
goods from producer to the customer. They make product available when, where and in
the sizes and quantities the consumers want it.
Session Summary
This study session exposed you to physical distribution system, the elements that
are related and affect the decision making, and also the functions and
responsibilities of distributors.
References
(C) Discussion Questions

1. Explain why just-in-time delivery system would require a supplier to pay
attention to quality control. Give an example to buttress your points.
2. Discuss state -of- the- art physical distribution system clearly stating the
requirements for it.
3. Discuss the nature of a distribution system
4. What are the functions and responsibilities of distribution?
5. Discuss the elements that affect the decision making in transportation
6. Discuss the different mode of transportation
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Purchasing
Introduction
Learning Outcomes
(A) Purchasing
(B) Purchasing Objectives/Functions
(a) Delivery and availability of goods and services
(b) Product quality
(c) Lowest price of the product
(d) Services
(e) Supplier relationship
(C) Purchasing Activities of Buyers
(D) Key Members in Buying Organisation
(i) Top Management
(ii) Technical Persons
(iii) Purchasers
(iv) Accounts/Finance Persons
(v) Marketing People
(E)Modern Purchasing Activities
1. Just-in-Time (JIT)
2. Single Sourcing
3. Value Analysis
4. Purchase Committee
Session Summary
References
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Introduction
Physical transportation was the previous study session discussion. In this study
session, we are going to discuss the purchasing objectives and function, the
purchasing activities of the buyer and also the key members in the buying
organisation.
Learning Outcomes
1. Explain the objectives of purchasing
2. Describe the activities of a buyer
3. Identify the key members in the buying organization
(A) Purchasing
Selling and buying are the two major pillars in marketing. But, buying
(purchase) is an important function in an organisation. To maintain an adequate
flow of goods and services into the operations; purchase department of a firm
develops organisational buying objectives and performs activities. The behaviour
of suppliers as well as potential users of the organisation influences the
department.
(B) Purchasing Objectives/Functions

Basically, the objective of the purchase department in an organisation is defined as
“buying the right items in the right quantity, at the right price, for delivery at
the right time and place”. To define what is “right” for each dimension is the
responsibility of management. The objectives of the purchasing function are as
follows:
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(a) Delivery and availability of goods and services: The prime objective of the
purchasing department is to ensure that purchased goods and services are available
or delivered when and where they needed. The untimely delivery of the purchased
good/services may affect adversely performance of the purchase function. On the
other hand, the vendor/supplier‘s reliability in delivery is the most important
criterion at the time of vendor evaluation.
(b) Product quality: The quality of product should be consistent with the
specifications and use of the product. Some products meet the Standard
Organisation of Nigeria (SON) or Indian Standard (IS) or British Standard (BS)
specifications, but they fail on shop-floor when they are used on a machine. It is
significant to ensure consistency in quality of product to reduce the cost of
inspection, interruptions in production process due to rejections, and arranging
replacements of rejected material.
(c) Lowest price of the product: Always, the buyers like to buy at the lowest price
consistent with availability and quality of the product. The buyers consider price as
an important objective, if delivery and quality objectives are met, because low
price is worthless, if the product is not delivered when needed or if the quality of
the product is unacceptable.
(d) Services: The buyers need many types of services to accompany the purchase
of goods for achieving the goals of organisation. These services include prompt
and accurate information from suppliers, application or technical assistance, spare-
parts availability, repairs and maintenance capability, and training, if required.
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(e) Supplier relationship: Different buyers have developed the purchase
departments in their organisation. Because, manufacturing firms spend more than
fifty per cent of their sales revenue on purchase. To develop a good long-term
supplier/vendor relationship and to develop new sources of supply, marketers need
to understand that purchasing objectives, these objectives are also based on the
company objectives. Resultantly, the buying members of an organisation are also
influenced by both purchasing objectives of the firm and personal objectives.
Personal objectives of buyers include higher status, job security, salary increments,
promotions and social considerations: friendship, mutually beneficial relationships,
and personal favours. The industrial buyers try to achieve both objectives
simultaneously. The marketers ought to realise that it is important to satisfy the
purchasing objectives of a firm as well as the personal objectives of the buying
members.
ITQ: What are the purchasing objectives?
ITA: Delivery and availability of goods and services, product quality, lowest price
of the product, services, supplier relationships.
(C)Purchasing Activities of Buyers

In consumer marketing, consumers make buying decisions based on certain mental
stages such as need recognition, information search, evaluation, purchase
decision, and post-purchase behaviour. But, in industrial markets the buying
decision making process includes observable sequential stages involving many
people in the buying organisation. The understanding of these steps/phases of
buying-decision making is helpful to a company to develop an appropriate selling
strategy. These phases or steps are as follows:
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1. Recognition of Need of the Buyer
2. Determination of the Characteristics and Quantity of Needed Product
3. Development of Specification of Needed Product
4. Search the Qualified Potential Suppliers
5. Obtaining and Analyzing Supplier Proposals
6. Evaluation of Proposals and Selection of Suppliers
7. Routine Order Selection
8. Performance Feedback and post-purchase Evaluation
(D) Key Members in Buying Organisation

The following discussion clarifies different key members in company buying
decisions:
(i) Top Management: For purchases of high value capital equipment, the top
management in most firms got involved in the supplier selection, as it may have a
major impact on the firm‘s operations. The top management in an organisation
consists of managing director, director, presidents, and vice-president or
general manager. They are generally involved in purchase policy decisions such
as diversification into a new product/project, approval of purchase or materials
department annual budgets and objectives, and deciding the guidelines for
purchase decisions.
(ii) Technical Persons: The technical persons are designers, production manager,
maintenance manager, quality control manager, R & D manager, and engineers.
Generally, they are involved in product specification or description, technical
evaluation of offers received from suppliers, negotiations with suppliers,
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performance feedback on products supplied, and so on. They visit the factories
of potential suppliers to achieve more information and assurance of manufacturing
capability.
(iii) Purchasers: Buyers are the individuals in the purchase or materials

department. They may be senior executives or managers, and also, at junior levels,
purchase officers or assistants. Generally, they are involved in most of the phases
or steps of the purchase activities. They coordinate with technical persons, top
management, accounts or finance persons within an organisation, as well as, with
suppliers or vendors externally. Buyer‘s influence on selection of suppliers is
considerable. They are conscious of keeping good relations with other decision-
making members within the organisation and also with the suppliers.
(iv) Accounts/Finance Persons: The contribution of finance/accounts persons are

seen while finalising commercial terms such as modes of payment, issuance of
bank guarantees, financial approval of capital purchases, issuing payments to
suppliers, and so on.
(v) Marketing People: When a purchase decision has an impact on the

marketability of a firm‘s product, marketing people become influencers in the
buying decision process. For example, a manufacturing firm market the electric
motors had to change its packing due to damages caused to the product in
transportation. It also affects the satisfaction level of the customers. The marketing
manager insisted that suppliers should use good quality and thicker wood for
packing the motors to minimise damage in transit.
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ITQ: Who are the key players in buying organisation?
ITA: Top management, technical persons, purchasers, accounts/finance persons,

marketing people .
(E) Modern Purchasing Activities

There are some contemporary purchasing
activities, which are used in buying
processes. These are discussed as follows:
1.Just-in-Time (JIT): It refers that the material arrives at the buyer‘s organisation
exactly when needed by the buyer. It minimizes the inventory, and increases the
quality and productivity. The goal of JIT delivery is zero inventory and
excellent quality of the material delivered by the supplier. This ensures no
rejection at the buyer‘s organisation. The JIT delivery means that the buying and
selling organizations work together closely to reduce costs.
2. Single Sourcing: In this activity, the company customers place orders with only
one supplier not to two or three suppliers. It means all the eggs are in one basket.
The practice makes possible for the buying and selling organisations to work
closely together, involve the supplier from the design stage, and utilize the
supplier‘s expertise.
3. Value Analysis: The company buyers to reduce cost with maintaining product
reliability use the value analysis. It involves analyzing a product item by the
function it performs, the value of the function, and the alternate methods of
performing the same function. It uses creative technique like brainstorming and
includes members of various departments such as production, quality control,
design, engineering, marketing, and purchase.
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4. Purchase Committee: Some buyers develop a formalized decision-making unit
i.e. purchase committee. It is used in many organisations including institutions
(such as universities and hospitals) and Government companies. Generally, in a
typical purchase committee, one or two individuals nominate in the decision-
making. The salesperson must provide information to all the members of the
purchase committee, and should target the real sales efforts to those dominant
members who influence the buying decisions. Identifying purchase committee
individuals, their technical and commercial expertise, their individual needs,
buying decision process, and the organisation structure are the important tasks to
be performed by the effective marketer.
ITQ: Identify the modern purchasing activities

ITA: Just in time, single sourcing, value analysis and purchase committee.
Session Summary
The discussions in this study session are as follows:
 The concept of purchasing
 Purchasing objectives and functions
 Purchasing activities of the buyers
 Key members in buying organisations
References
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(F) Discussion Questions
1. Write extensively on the term, Purchasing.
2. i. Describe the activities carried out by the purchasing department of a firm.
ii write extensively on the term, Purchasing Function.
3. Write extensively on the importance of purchasing.
4. Identify and describe the possible objectives of purchasing.
5. i. Write on the meaning of purchasing management.
ii identify and describe the objectives of purchasing management.
6. What are the principles of purchasing management? Write on them. (8 R’s)
7. Describe the purchasing cycle/system (Identify the steps in purchasing)
8. Identify the eight (8) main stages involve in the purchasing process.
9. Purchasing management process consists usually of four stages. Identify and
explain them.
10. i. Identify and explain the steps involve in purchasing planning.
ii identify the steps involve in purchasing reporting.
iii Write on the impact of purchasing management to a marketing oriented
firm.
11. What are the most commonly used methods of business buying?
12. How do environmental, organizational, interpersonal, and individual factors
affect purchases?
13. List and explain the stages of a buying - decision process.
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Promotional Elements and Promotional Mix
Introduction
Learning Outcomes
(A) Promotion
(B) Promotion Mix
1. Advertising
2. Personal Selling
(C) Selling Process and the Role of Salesperson
(i) Prospecting
(ii) Communicating
(iii) Handling Objections
(iv) Selling
(v) Servicing
(D) Qualities of a Successful Salesperson
3. Sales Promotion
Methods of Sales Promotion
a. Trade Shows
b. Catalogs
c. Samples
d. Promotional letters
e. Sales Contests
f. Seminars
g. Promotional Novelties
h. Entertainment
4. Publicity
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5. Public Relations
6. Direct Marketing
Session Summary
References
Introduction
This study session will educate you on the issues of promotional elements and
promotional mix. You will appreciate the fact that promotional strategies is one of
the strategies companies use to market their products.
Learning Outcomes
After studying this this study session, you should be able to:
1. Describe the promotional strategy
2. Explain the selling process and role of a sales person
3. Discuss advertising and objectives of advertising
(A) Promotion
Promotion consists of communications which is used to inform, persuade and
influence the decision making power of prospective and existing customers.
The objectives of promotional strategy vary from company to company where
some companies use the strategy for capturing selected markets while others use it
to increase or stabilise the sales and to give additional information and added value
of their products.
(B) Promotion Mix

The promotion activities of companies are classified as follows:
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1. Advertising
According to Kotler, advertising is any form of non-personal presentation and
promotion of ideas, goods and services through mass media such as newspapers,
magazines, television or radio by an identified sponsor.
Objectives of Advertising
Any marketer uses advertising as a promotional tool as it performs so many
functions that help him to achieve the following objectives:
 Create awareness: Advertising creates awareness about a supplier or his
products to the potential buyers who are unaware about the availability of
their products in the markets.
 Reaching inaccessible places: There are places that are not reachable by the
company sales force and there are important decision makers for purchase of
products who cannot be met by the sales force. These places could be
reached easily through advertising. Thus, advertising in trade journals,
business magazines that are read by R&D Managers, engineers help the
companies to reach their target audience.
 Improve sales: Advertising helps salespersons to improve their sales by
increasing their sales efficiency and effectiveness as people are already
aware of their company, products, etc.
 Reduce cost: A single advertising reaches a vast number of people that
comes out cheaper than a single salesperson meeting so many people
personally and explaining them in details about the company’s products.
Thus, advertising not only reduces cost but also saves time of the company.
Besides the above, some other objectives of advertising are to provide relevant
information to the potential buyers, influence their attitudes, remind them about a
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product or a company, support and motivate the distribution channel members and
sales agents.
ITQ: What are the objectives of advertising?

ITA: Create awareness, Reaching inaccessible places, Improve sales, and Reduce cost.
2.Personal Selling
Personal selling is one of the oldest forms of promotion. It involves the use of a
sales force who orally communicates about the company’s products or services
to the potential buyers with an intention to make a sale. Personal selling is the
primary demand stimulating force in the company’s promotional mix. As the cost
per sale through personal selling is too high, marketers have to carefully manage
and integrate personal selling into organisation’s marketing mix. This will also
lead to maximise its effectiveness and efficiency. The job of personal selling starts
after determining the target segment in the organisation’s market. The sales force
in most of the organisations follow the “systems selling" approach where they
recognise the entire problems faced by their buyers and offer them total solutions
rather than just selling the product. This is advantageous to the buyers as all their
problems are solved in a single go by one party who would take the responsibility
if anything goes wrong. The companies too have competitive advantage by
adopting this strategy.
Advantages and Disadvantages of Personal Selling

There are various advantages of personal selling that help an organisation to
promote the products effectively and increase the sales. Some of the advantages
are: –
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 Personal selling is a one-to-one activity where customers get personal
attention. This gives an opportunity to understand the customer needs better
and make an effective sale
 The marketing manager can customize the sales message accordingly
depending upon the needs and types of customers
 As there is two-way communication process in personal selling, the sales
team has a good opportunity to respond directly and promptly to any of the
customer’s queries and concerns
 Personal selling helps in passing on large amounts of technical data or other
complex product information to the customers. This indirectly educates the
customers and updates them on latest happenings on the industry, company
and new products.
 Personal selling gives the sales force a chance to demonstrate the product
effectively and clarify any doubts on the spot
 Frequent meetings between sales force and customers provide an
opportunity to build long-term relationships.
There are certain disadvantages of personal selling like the cost of employing a
sales force (recruiting and maintaining) is expensive. In addition to the basic pay
package, they need to be offered incentives in order to achieve sales. Other
supplementary support to make sales calls like car, travel, mobile phone etc also
adds on to the cost. In addition, a sales person can meet only one customer at a
time that makes it a costly affair of reaching a large audience.
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(C) Selling Process and the Role of Salesperson
There are different steps that are involved in a selling process and the salesperson
has a significant role to play in each of the steps. It is the role of the salesperson
that helps the organisation to increase its sale and reach its objectives. It therefore
becomes important to understand their role during each of the steps in order to
further enhance their performance and clinch any deal successfully.
(i) Prospecting: Prospecting is the first step in the sales process that refers to
identifying a list of potential buyers. There are various sources from which
salespeople get the list of prospective buyers. Some of the sources include
referrals, directories, commercially-available databases or mail lists, company sales
records and in-house databases, public records, trade shows, and a wide variety of
other sources. The salespeople have to systematically structure the prospecting
activities in order to identify only those potential customers who fit the profile and
have genuine interest to buy the product or service.
(ii) Communicating: This step involves the sales professionals communicating

with the buyers and trying to understand their current needs, their current use of
products, identifying key decision makers among the buyers, planning and creating
a sales presentation to address the identified and likely concerns of the prospect,
and setting call objectives. During this phase, the sales people also develop a
preliminary overall strategy for the sales process keeping in mind that the strategy
may have to be refined as they learn more about their prospects.
(iii) Handling Objections: The course of objection handling includes the

prospective buyers holding, inspecting or testing the product directly. The
product is demonstrated by the sales people by means of audio visual presentations
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such as slide presentations or product videos. It should be the endeavor of the sales
person to let the prospect do most of the talking during the presentation. Their
responsibility should be restricted to address the needs of the buyers as far as
possible. They should have the ability to convince them by showing that they truly
understand them and care about their needs.
{iv) Selling: Selling is the process of delivering the products or services to the
customer's satisfaction and receiving the payment after adequately addressing any
of their final objections or obstacles. Many sales people are weak and hesitate or
lack the confidence to ask for the order. They should know that closing does not
involve literally asking for order. They can ask some related questions like what
color the buyers like, which model or size they would prefer, when they would like
the delivery to happen or what they would lose if they do not place the order now.
Depending upon the situation, the salesperson also offers discounts, credit facility
to induce the buyer.
(v) Servicing: The marketers should provide their customers with efficient service
from the point of sale till the goods are delivered and also after the post-sale. Many
of the salespeople often overlook the servicing/follow-up aspect which is a very
important part of the selling process. It helps to maintain a good and long term
relationship with customers and gives supplementary revenue to the organisation.
After an order is received, it is in the best interest of everyone involved that
the salesperson should follow up with the prospect. This ensures that the
product was received by the customer in good condition, at right time, with proper
installation and at the place as required by the customer. It also ensures whether
adequate training on product usage was given to the customer before they handle
the delivered product/equipment. The salesperson should confirm through the
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follow-up whether the entire process was acceptable to the customer. This is a
critical step in creating customer satisfaction and building long-term relationships
with customers.
If the customer experiences any problems during the process, the sales
professionals should take the responsibility to intervene and become the advocate
of customers to ensure their satisfaction. This has the probability of leading to new
needs, additional purchases, and also referrals and testimonials which can be used
as sales tools.
ITQ: What is a selling process?
ITA: Selling process is the complete set of steps that must be taken in order to execute a
sale transaction from start to finish. They are prospecting, communicating, handling
objectives, selling and servicing.
(D) Qualities of a Successful Salesperson

Any salesperson in order to be successful should possess the following qualities
that would help them to reach high in their career path. They should have the
qualities like –
 Very good knowledge about the products
 Zeal to give an effective presentation to customers
 Ability to clinch the orders/deals fast
 Ensuring prompt and quality service to the customers
 Good listening skills to understand the customer‘s requirements better
 Inviting more questions from the customers and handling objections by
giving convincing answers
 Organising the place of work in a better way
113
 Having wide contacts within the industry
 Creating good impression and getting more business
Though there are many other qualities that a successful salesperson should possess,
these are the most preferred ones by the industrial organisations.
3. Sales Promotion
Sales promotion is an activity used by companies to boost the immediate sales of a
product or service. It is used to increase the sales by impressing the customers,
rewarding them and also motivating the sales force to get more business. There are
different techniques used in a sales promotion activity like a free-sample
campaign, offering free gifts, arranging demonstrations or exhibitions, organising
competitions with attractive prizes, temporary price reductions, door-to-door
calling, telemarketing, using personal letters, etc.
More than any other element of the promotional mix, sales promotion is about
“action”. It is about stimulating customers to buy a product. It is not designed to be
informative – a role which advertising is much better suited to.
ITQ: What is sales promotion?

ITA: Sales promotion is an activity used by companies to boost the immediate sales of a
product or service. It is used to increase the sales by impressing the customers, rewarding
them and also motivating the sales force to get more business
Need For Sales Promotions

 To introduce a new product in the market
 To influence the public with the help of new uses of the product
114
 To increase the frequency of purchase by each buyer
 To encourage dealers to stock more goods
 To withstand in the competitive field
 To increase the sales by imparting special training to salesmen and by
window display
Methods of Sales Promotion

There are many sales promotional methods available for companies. Some of the
techniques they can use are as follows:
a. Trade Shows (or Exhibitions): Trade shows present the manufacturers an

occasion to exhibit and demonstrate their products to a large number of customers
in a short period of time. They are the second most important promotional activity
for companies after personal selling. Trade shows are generally organised by trade
associations annually at a particular location or at some exhibitions where in
companies lease some space to display and demonstrate their products to the
potential customers.
Trade shows offers several advantages for companies like –

 One-to-one contact with the potential buyers and existing customers that
increases the awareness on company and its products
 Occasion to sell the products to the customer directly where no
intermediaries are involved
 Building database of prospective customers
 Building goodwill and relationship with the potential buyers
115
 Demonstrating non-portable (bulky) equipment that is otherwise difficult to
take to each prospect
 Discovering new and innovative products of competitors
 Opportunity to get new product ideas due to customer interactions
 A good break for the newly joined salespersons who get on the job training
by interacting with varied customers
 Generating leads for new business
There are certain disadvantages also with trade shows like –

 It is one of the expensive form of promotion
 It is very difficult to identify the potential customer among the huge
audience visiting the exhibition
 Pulling/attracting the customers to visit one place is very difficult
b. Catalogs: Catalogs are the printed form of direct marketing promotional

tools used by companies to provide information about their products
especially if they have long product lines with different shapes, sizes or other
features. The company sales force meets the potential buyers and explains the
product features by offering catalogs. Based on the different catalogs collected
from different suppliers, a potential buyer compares the features of different
products and seeks quotations from the supplier who provides best quality product
at economical price. Hence, a catalog should try to provide all the relevant
information that a buyer is seeking from the company about a particular product
(specific catalog) or all the products in general (general catalog). A catalog
commonly contains information like product specifications, performance data,
service requirements, application of products, illustrations and drawings, etc.
116
c. Samples: Samples are the free or charged offerings given to the prospective
buyers as a part of product development program. Samples are used mostly to
make an entry in the prospective customer‘s place. Eg. A medical representative
offering a sample of tablets to the doctor that can be distributed to the needy
patients.
There are various ways in which a sample can be distributed. A promotional

literature can be sent through post, anti-virus software is offered free through
Internet, free shampoo sachets are offered through dealers when some product is
purchased, cars are offered for a test drive when personal visits are made to a
dealer. Sometimes samples are charged by the suppliers to ensure that customers
really test them and also to control the huge costs involved in offering them free.
Samples have a chance of being misused or taken away by the salesperson and
“sample hounds” who are not genuine prospects for the products. Sometimes
samples cannot be distributed because of the cost involved, weight, bulkiness,
toxicity and intricate design.
d. Promotional letters: This is one of the effective form of promotion where in

personalized letters are sent to individual customers along with catalogs and
coupons giving technical specifications about an existing or new products which
are to be launched. Letters to customers at regular periods is a good way of
keeping in touch with them particularly in case of products that are purchased
infrequently. The cost of promotional letter is very less compared to the personal
visits made by the sales force and it also receives good attention. Since good
correspondence and writing skills are the requisite for this, there should be special
117
correspondence section who can take advise from salesperson regarding the kind of
letters to be sent and to whom it should be addressed.

e. Sales Contests: There are various sales contests that are held by different
organisations in order to boost the morale of their employees and other
intermediaries. Depending on the amount of sales generated, employees and
dealers are offered incentives in the form of cash prizes, gifts or foreign trips.
f. Seminars: Seminars are conducted by companies by making audio-video

presentation through the technical experts of the company. The seminar is followed
by a question and answer session for the benefit of buying organisations where
technical information is provided to them relating to their nature of activity. This
helps in creating a favourable image about the company and also to establish new
contacts with various technical people from the buyers.
g. Promotional Novelties: These are the small gift items given by the company to
existing and potential customers with their company name and logo printed on it.
The common promotional novelties include diaries, key chains, calendars, pens,
bags etc. Promotional novelties should be generally inexpensive, unusual and eye-
catching, useful to the customers and have multiple impacts. Promotional novelties
are offered according to the type of customers - costly for senior management,
medium for middle management and low cost for junior management positions.
h. Entertainment: Manufacturers of highly standardised products use

entertainment for promotional purposes. Entertaining a customer depends on the
type of products, the circumstances for the seller and the government regulations
governing them. Entertainment can have either positive or negative effects
118
depending upon the buying situation, the nature of products, policies of buyers’
and the buyers’ culture.
ITQ: What are the methods of sales promotion?
ITA: trade shows, catalogues, samples promotional letters, sales contest, seminars,
promotional novelties and entertainment.
4.Publicity
When any significant news about a product is made known to the people through a
published medium like radio, television, newspaper or otherwise, such kind of act
is known is publicity. Publicity has very high credibility in the eyes of buyers as
the sponsor does not pay anything for publicity and it is not a part of any
promotional program. It is the least costly promotional alternative available for the
company that is very effective. Publicity helps to generate sales leads and
improves relationship with customers. Technical articles published in trade
journals about a company or products with the identity of authors (such articles are
called as signed articles) improve the image of the company and the products.
They form as a good source of information for customers.
Though publicity is free, there are some associated costs attached to it. The costs
incurred are for reasons like obtaining space in the journal or magazine for writing
an article, preparing the matter (through professional writers, proof reading, taking
approvals by sending to Head Office, etc) for news release and arranging for it to
be placed in the right magazine by contacting the respective editors. But compared
to other promotional tools, the costs incurred are very less. Hence, publicity should
be well integrated with other promotional tools in order to have effective
marketing communication.
119
5. Public Relations
Public Relations Department is located at the top level of the company and it deals
with everybody i.e. customers, suppliers, shareholder, employees, legislators,
government and press. And the important job of this department is to maintain
relations with people and build a good image about the company in their eyes
(e.g. if any new product is launched by any company, the MD or Chairman calls
for a press conference and explains about the product and its features and release in
the market)
Public Relations is much broader in scope than publicity. It comprises of a range of

programs that are planned to promote a good image about a company or its
individual products.
6. Direct Marketing
This is a recent activity that has come up and is used extensively by the companies.
The various tools used in direct marketing are direct mails, telemarketing and
online marketing channels. A direct marketing channel does not involve any
intermediary and the sale is done by the company by directly contacting the target
customer. As the cost involved in direct marketing activity is much less compared
to the cost of company sales force directly meeting the customers, many
organisations prefer this tool. This tool aids the sales force to gain entry into
prospective customer‘s office where prospective customers are identified
beforehand and are informed about the company products.

-Direct Mail: The existing and prospective customers are mailed promotional
letters, catalogues, CDs, etc., by the company where they are provided with
necessary information about the company‘s products and services and any schemes
120
or offers it has. This helps the potential customers to respond the company that in
turn would send its sales force to meet them personally and close the sales. Though
this is one of the cheapest tool used by marketers, they should be careful about the
selection of target audience as wrong identification would waste the entire efforts.
Even the prospects’ correct contact details should be available to avoid wastage of
mails. Generally, mailing lists are obtained by companies from websites, telephone
companies, trade publications, mailing list brokers, industrial directories,
company‘s database etc.,
-Telemarketing: In this process, prospective customers are contacted through

telephone and provided with all the required information and then converted to
sales lead depending on their interest towards the company product. Sometimes,
people who are self-interested in a company and seek information about a product
or service also call the company after getting telephone numbers from various
sources like telephone directory, advertisement etc., Telemarketing helps the
companies to reduce their sales force and increase the sales volume provided the
companies have trained personnel who can talk effectively over phone.
-Online marketing channels: These are the recent tools that have come up after
the advent of internet and information technology. They are used by many
marketers for direct marketing of their products where they use this tool to find,
reach, communicate and sell to buyers. There are certain advantages of online
marketing like being very cost-effective as even small organisations can use it, and
accessing and retrieving the information is fast. But, unless a user has a computer
system with modem attached and is computer literate, it does not make sense using
this channel.
121
ITQ: what ate the tools used for direct marketing?
ITA: various tools used in direct marketing are direct mails, telemarketing and online
marketing channels
ITQ: What are the promotional mix?

ITA: Advertising, personal selling, sales promotion, publicity, public relations, and direct
marketing.
Session Summary
The discussion of this study session was based on:
 Concept of promotion and promotional mix
 Advertising and objectives of advertising
 Personal selling, advantages and disadvantages of personal selling
 Selling process and the role of a sales person, Quality of a successfully sales
person
 Sales promotion, the need for sales promotion and the methods of sales
promotion
 Publicity, public relation and direct marketing.
References
122
(E) Discussion Questions

1. What is Promotion? ii. What are promotional elements? Also, describe
promotional mix.
2. Write extensively on the following:
a) Advertising b) Personal selling c) Sales promotion d)Public relations e)
Direct marketing f) Corporate image g) Sponsorship h) Guerilla marketing i)
Product placement.
3. What is Corporate communications? How does it differ from Marketing
communications? State any obvious relationship between the two.
4. Write on the following: a) Noise b) Redundancy c)Codes d) Denotations and
Connotations.
5. What are Marketing channels? Write extensively on this.
6. Write on this concept, Integrated Marketing Communications (IMC)
campaign.
7. Write extensively on the term, Direct Marketing.
8. What criteria should a marketing communicator take into account in
selecting an appropriate communications mix for a product or service?
9. Elaborate on the concept that communication between buyers and sellers in a
market is a two way process.
10. In your own words, discuss the integrated marketing communications
concept.
123
10.0 FURTHER READING
124
11.0 GLOSSARY
Advertising: The paid, public, non-personal announcement of a persuasive

message by an identified sponsor; the non-personal presentation or promotion by a
firm of its products to its existing and potential customers.
Advertising Agency; A firm specialising in the creation, design and media

placement of advertisements, and in the planning and execution of promotional
campaigns.
Advertising Allowance: A discount given to a retailer by a supplier whose brand

or product is featured in the store's newspaper, television or radio advertising or in
catalogs, flyers or similar promotional pieces.
Advertising Budget: The sum allocated in a particular accounting period for

expenditure on advertising; also called an Advertising Allocation or an Advertising
Appropriation.
Advertising Campaign: A planned program of advertising with particular

objectives
Advertising Effectiveness: The degree to which the objectives of an

advertisement or advertising campaign have been achieved; the effectiveness is
commonly gauged by measuring the effect on sales, brand awareness, brand
preference, etc.
Advertising Exposure: One presentation of an advertisement to an audience;

advertising managers must decide how many 'exposures' will be required to
achieve their goal or objective.
Advertising Media: Outlets or vehicles for instance;(newspapers and magazines,

television, radio, cinema, posters, etc.) used in communication between advertisers
and customers. Note that advertising media is a plural term; its singular form is
advertising medium.
Advertising Message: The central, underlying idea or theme within an

advertisement.
125
Advertising Objective: The specific aim or intention of an advertisement (for
example, to inform, to persuade, to remind)
Advertising Platform: The basic issues or selling points that a company wishes to
have included in an advertising campaign.
Advertising Research: Research done to test the effectiveness of advertising; this

may include the pre-testing and post-evaluating of specific advertisements and
campaigns. Communication-effect research attempts to measure whether the
advertising communicates effectively; sales-effect research attempts to measure
whether it produces the desired level of sales.
Advertising Specialty: any product or item, such as a pen or key-ring, which is

imprinted with a company's name, brand name or logo, and given away as a gift.
Cash Discount: A reduction in price offered to a buyer in return for prompt

settlement of account
Channel Conflict: Discord among members in a marketing channel
Channel Design: The way in which the network is constructed to perform product
distribution and delivery.
Channel Flows: The flow of physical goods and services, title, promotion,
information and payment along a channel of distribution.
Channel Length: The number of levels of marketing intermediaries used in the

channel of distribution
Channel Power: The circumstances - economic or social that allow one channel
member to control another
Channel Strategy: Decision-making related to the selection of the most

appropriate method of controlling the flow of goods or services from producer to
end-user.
Channel Structure: The way in which a network of participating intermediaries is

constructed in the delivery chain to perform the required activities to achieve an
organization’s distribution goals and objectives
126
Commercialization: The final stage of the new product development process in
which the decision is made to put the new product into full scale production and to
launch it.
Communication Process: The process by which a message, encoded by a sender,

is transmitted through a medium to a receiver, who encodes the message and
provides feedback
Comparative Advertising: Advertising in which a firm names a competitor's

product and compares it with its own; also called Comparison Advertising.
Deceptive Advertising: Advertising intended to deceive consumers with false or

misleading claims.
Deceptive Packaging: Packaging intended to deceive the purchaser; excessive

ullage creates the impression that the volume of the contents is greater than it
actually is.
Deceptive Pricing: The pricing of goods and services in such a way as to cause a
customer to be misled; an example of deceptive pricing is bait-and-switch pricing.
Distribution: A theoretical probability distribution that is similar to a normal

distribution. The T distribution is used to estimate probabilities based on
incomplete data or small samples. It differs from a normal distribution in that it has
an additional parameter called degrees of freedom. Degrees of freedom are the
number of variables used in the calculation of a statistic.
Family Brand: A brand name used for a number of products in the same line, such
as Revlon cosmetics or Heinz canned foods; also referred to as a Blanket Brand.
Family Packaging: The use of one design or other key packaging element to
integrate the packaging of two or more individual items. The packages clearly
belong to one set, but there are usually some individualization, especially in brand
name.
Label: The part of a package that carries information about the product it contains;
a label may be a permanent part of the primary package or a tag, sticker, band, etc.
127
Labeling: Activities associated with the design and content of the wording on a
product or package which identifies it and provides instructions for its handling
and use.
Package: The wrapping, packet, carton, bottle, box, etc., used for containment,
protection or promotion of a product.
Package Modification: Making any change to the attributes (shape, color, size,
graphics, lettering, etc.) of a package.
Packaged Goods: A sub-category of consumer non-durable goods; toothpaste,

shampoo and soap powder are packaged consumer non-durables.
Packaging: The materials (glass, aluminum, cardboard, etc.) originally intended

merely to contain and protect a product; in recent years the role of packaging has
been broadened so that, in addition to containment and protection, its purpose is to
attract attention, provide additional product information, and assist in promotion.
Personal Selling: A form of promotion utilizing the services of a sales team; one
of the major controllable variables (with advertising, sales promotion and
publicity) of the promotion mix
Physical Distribution: The storage, handling and movement of goods within an

organization and their shipment to customers.
Pioneering Advertising: advertising which is intended to create primary rather

than selective demand; commonly used at the introductory stage of the product's
life cycle.
Place: One of the four controllable variables (with product, price and promotion)
of the marketing mix; the delivery of a good or service to a consumer; also referred
to as Distribution.
PLC: Abbrev. Product Life Cycle
Rate: 1. (Advertising definition) the cost of a unit of space or time in an

advertising media vehicle. 2. (Physical distribution definition) a charge usually
expressed in dollar terms for the performance of some transportation or distribution
service
128
Wants: The form, shaped by culture and individual personality, in which basic
human needs are given expression. For example, the need to satisfy hunger might
be expressed as a want of meat by one person and as a want of fruit by another. See
Needs.
129

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AHMADU

MASTER IN BUSINESS ADMINISTRATION (MBA)

© 2016 Distance Learning Centre, ABU Zaria, Nigeria

First published 2016 in Nigeria.

Published and printed in Nigeria by:

Retina Innovative Enterprise,

Kaduna State- Nigeria.

Tel: +234 7035953365, 08054907857

‐ Sir John Daniels

4.0 COURSE OUTCOMES

5.0 ACTIVITIES TO MEET COURSE OBJECTIVES

Grades will be based on the following Percentages :

Open education resources

WEEK/DATE MODULE STUDY SESSIONS ACTIVITY INDIVIDUAL ASSIGNMENT

Week 4 1.Study the course material of this session

Week 6 1.Study the course material of this session

Week 10 1.Study the course material of this session

Week 13 1.Study the course material of this session

8.0 DISCUSSION FORUM

8.1 Topical Discussions

8.2 Discussion Questions

Marketing centres on a set of processes for creating, communicating and delivering

ITQ: What is one of the shortest good definition of marketing?

ITA: Meeting needs profitably.

The simple premise of marketing is that to be successful, any organisation must

ITQ: What is the focus of marketing?

(B) The Marketing Concept

ITQ: What is the proper method of implementing marketing concept?

(D) Benefits of the Marketing Concept

the emphasis that firms give in their marketing activities. An organisation

can adopt one or more philosophies depending on the market it is facing.

‘Tecno’ phones are growing in popularity amongst consumers on very tight

exclusive to the middle class and the rich.

3. What is Marketing? What is meant by the Marketing concept?

Section and Subsection Headings

(A) Product Planning

(A) Product Planning

Product planning includes improvements in existing products as well as deletion of

ITQ: What is product planning?

(B) New Product

ITA: Acquisition and new product development.

The introduction of new products in the market place - as a result of innovation -

New products are original products, product improvements, product modifications

ITQ: What improves the standard of living of consumers?

(C) New Product Development Process

3. Concept Development and Testing. Those ideas that survive screening

4. Business Analysis. Once management has developed a satisfactory product

5. Marketing Strategy Development. The new product developer will have to

Product development proceeds from design and production of the basic

8. Commercialisation. This is the final stage of product development. At this

9. Monitoring and evaluation. The launching of a new product is not an end.

ITQ: What are the processes of new product development?

(D) Discussion Questions

Product Life Cycle

(A) Product Life Cycle (PLC)

ITQ: Who developed the product life cycle and why?

(B) Stages of product life cycle

 Growth – this is a period of rapid market acceptance and substantial

 Maturity – at this stage, there is a slowdown in sales growth because

ITQ: Identify the stages involved in a product’s life cycle?

Discrete Choice Theory of Product Differentiation

ITQ: What is Product Differentiation?

ITQ: What is product positioning?