INNOVATION AND ENTREPRENEURSHIP

The Importance of Innovation in Entrepreneurship According to McKinsey, 84% of executives say that
their future success is dependent on innovation. Although innovation may sound like a buzzword for
some, there are many reasons why companies put a lot of emphasis on it. In addition to the fact that
innovation allows organizations to stay relevant in the competitive market, it also plays an important role
in economic growth. The ability to resolve critical problems depends on new innovations and especially
developing countries need it more than ever. Based on the Cambridge dictionary, innovation by
definition is a new idea or method that is being tried for the first time; the introduction of something new.
Without innovation, there isn’t anything new, and without anything new, there will be no progress. If an
organization isn’t making any progress, it simply cannot stay relevant in the competitive market. The
economy is composed of enterprises and businesses. Our economy has survived because the industry
leaders had been able to adapt to the changing times and aimed at meeting the communities’ needs
mostly. Any small business is integral to the economy. Without it, our economy would not survive. But a
business must also sustain itself, be able to constantly evolve to fulfill the demands of the community and
the people. In every business, it is imperative to be industrious, innovative and resourceful.
Entrepreneurship produces financial gain and keeps the economy afloat, which gives rise to the
importance of innovation in entrepreneurship. Entrepreneurs are innovators of the economy. It is not just
the scientist who invents and comes up with the solutions. The importance of innovation in
entrepreneurship is shown by coming up with a new way to produce a product or a solution. A service
industry can expand with another type of service to fulfill the ever changing needs of their clients.
Producers can come up with another product made of raw materials and by-products.
The importance of innovation in entrepreneurship is another key value for the longevity of a business. A
need appeared a trigger for entrepreneurs and businesses. They saw the need within the community and
among themselves that they have come up with a solution. They seize the opportunity to innovate to make
the lives more comfortable. And these solutions kept evolving to make them better, easier and more
useful. Entrepreneurs must keep themselves abreast with the current trends and demands. Manufacturers
are constantly innovating to produce more without sacrificing the quality. Companies and enterprises
keep innovation as part of their organization. Innovations contribute to the success of the company.
Entrepreneurs, as innovators, see not just one solution to a need. They keep coming up with ideas and do
not settle until they come up with multiple solutions. Innovation is extremely important so that companies
often see their employees’ creativity as a solution. They come up with seminars and trainings to keep
their employees stimulated to create something useful for others and in turn, financial gain for the
company. - To give reasoning for the statement, we will give arguments. Many companies with a global
name can be an example of innovative activity. One of these companies is Adidas, which is famous for
having a huge range of high-quality sportswear all over the world. But despite this, it continues to
innovate in production and improve product quality. These innovations include the introduction of fitness
bracelets to the market, which are very popular because it makes sports more convenient and productive.
Another example is the innovative activity of Google. Creating virtual assistants on the network not only
attracts a larger number of users, but also makes using the Internet more comfortable and easier. The
introduction of Google technologies has not stopped for a long time, which indicates that innovation
creates new opportunities. - The other factor that raises the importance of innovation in entrepreneurship
is competition. It stimulates any entrepreneur to come up with something much better than their
competitor in a lower price, and still be cost-effective and qualitative. Small businesses see the
importance of innovation in entrepreneurship. They were able to compete with large industries and see
their value in the economy. Small businesses are important as they are directly involved in the community
and therefore, contribute to their financial and economic gain. These small businesses know exactly what
community needs and satisfy these needs. All things start small. Thus, we can conclude that innovation is
an indispensable tool in entrepreneurship and business. In addition, Innovation is important not just in
entrepreneurship. As individuals, we are innovators by adapting well to our needs and creating our own
solutions. Entrepreneurs are the same. The innovation in entrepreneurship helped the country by changing
with the times and producing new products and services from ones that already exist. And, being
innovative has helped us become successful in all our endeavors.

If entrepreneurs all did business in the same way, in the same industries, in the same
marketplace, and with the same products and services, nobody would stand out with a
competitive advantage and many businesses would not be in business for very long.

Carving out a niche for yourself as an entrepreneur, or making sure that your Unique Selling
Proposition (USPs) helps differentiate your business to make it stand out from the clutter,
you need to implement high levels of creativity and innovation into all of your
entrepreneurial practices. Innovation and entrepreneurship, and more specifically, creativity
in entrepreneurship is an important process which helps entrepreneurs generate value, useful
unique products, services, ideas, procedures, or new business processes.

Role of Creativity and Innovation in Entrepreneurship

Creativity and innovation helps develop new ways of improving an existing product or service to
optimize the business. Innovation is the driving force that allows entrepreneurs to think outside the box
and beyond the traditional solutions. Through this opportunity new, interesting, potential yet versatile
ideas come up.

Overall, creativity and innovation are integral to entrepreneurial success. They empower entrepreneurs to
discover opportunities, solve problems, differentiate themselves, and adapt to change, continuously
improve, and drive business growth. By embracing creativity and fostering an innovative mindset,
entrepreneurs can build successful ventures in an ever-evolving business landscape.

Entrepreneurs and creativity

Creativity is an indispensable trait for entrepreneurs. It drives idea generation, opportunity recognition,
problem-solving, innovation, and differentiation. Creative entrepreneurs embrace risk, communicate
effectively, and continually learn and adapt. By harnessing their creativity, entrepreneurs can navigate
challenges, seize opportunities, and build successful and impactful ventures.

But creativity does not only assist entrepreneurs in the initial stages of coming up with a business idea.
Creativity will also be a driving force and also highly valuable in terms of:

 Coming up with branding and marketing ideas

 Ideas for blogs, other SEO-related content
 Finding creative solutions to everyday business problems
 Fun and exciting social media strategies
 A good balance of linear and lateral thinking

Entrepreneurs and Innovation

Entrepreneurs and innovation go hand in hand. Innovation is a key driver of entrepreneurial success, and
entrepreneurs play a critical role in bringing innovative ideas to life. They adapt to change, solve
problems, and fuel business growth through innovation. By embracing innovation, entrepreneurs can
create disruptive solutions, differentiate themselves in the market, and ultimately achieve entrepreneurial
success.

Having a good hold on innovation and as a net result, innovative ideas, is very important for
entrepreneurs. Not only will an innovative mindset be advantageous in coming up with products, services,
and business ideas, it will also be exceptionally helpful when it comes to adapting to change and finding
new and improved ways of doing things in your business structure.

Benefits of using creativity for innovation

For decades, advertising and marketing companies have used creativity to differentiate innovative
products and services being advertised against other like products in the marketplace. Using creativity for
innovation can lead you to be a better entrepreneur and infusing creativity into your business makes you
an innovative leader within your industry. Without creativity, businesses run the risk of slipping into the
clutter that may exist in an industry.

To improve your chances of successful entrepreneurship, here are some of the benefits of being a creative
and innovative entrepreneur:

 You will be able to create new products or services that solve problems for people
 You will be able to improve processes and make them more efficient
 You will be able to find new markets for existing products or services
 You will be able to create new jobs
 You will be able to make a positive impact on society
 You will be able to have a lot of fun and satisfaction in what you do Examples of Entrepreneurial
Creativity and Innovation

Definition of Innovation Management

For many organizations and countries alike, innovation and innovation management are no longer luxury
items, but rather necessities and a means of sustaining economic development and competitiveness. To
serve customer well and maintain the competitive position in business, companies are forced to focus on
the creation, updating, availability, quality & use of innovation by all employees and teams at work and in
the market place.

Innovation can be defined as the implementation of new created ideas for generating business value.
Many times, people use the term ‘innovation’ for ‘innovation creation’. But there is a difference between
the two. While innovation creation is an important aspect of innovation processes, so is the ability to
search for and identify relevant external innovation, applying existing innovation to new contexts,
understand and absorb unfamiliar external innovation to blend and integrate different bodies of innovation
together. Thus innovation processes are much more than innovation creation process.

Innovation is the creation, evolution, exchange and application of new idea into marketable goods and
services, leading to the success of an enterprise, the vitality of a nation’s economy and the advancement
of society. In simple words we can explain the term innovation as generation of novel ideas and their
implementation to create new products and services to gain competitive advantage and achieve new
heights in the market.
There is no agreed definition of Innovation Management. The term refers to a process of generating value
to the organization through the creation, dissemination, renewal and proper application of innovation. It
can be defined as a creative way of utilizing information and people throughout the organization. A
simple definition will be that innovation management is about make use of “what we know” in the best
possible manner so as to gain the competitive advantage in the business world.

Innovation management is a framework within which the organization views all its processes as
innovation processing, where all business processes involve creation, dissemination, renewal and
application of innovation toward organizational sustenance and survival.

Innovation management is the mantra that facilitates the smooth flow and distribution of innovation of the
individuals, groups or teams across the organization in certain ways that directly affects the performance
and potential levels.

Precisely, Innovation Management aims at getting the right information within the right context to the
right person at the right time for the right business purpose. It comprises of a range of practices used in an
organization to identify, create, represent, distribute and enable adaptation of insights and experiences.
Such practices contribute in the things like improved performance levels, competitive advantages,
innovations and sharing of lessons learned and continuous improvement of organization.

When we think about innovation one question arises in the mind: Does the innovation come naturally? Or
it may be taught. The answer is that everyone can be creative and innovative the only requirement
is to encourage the innovation among people. In the words of Peter Drucker “Innovation is real
work and it can & should be managed like any other corporate function but that does not mean it
is the same as other business activities. Indeed, innovation is the work of knowing rather than
doing.”

One strategy to build up an innovative organization is getting people to accept that the way they work just
might not be the best. The most important thing is to help people broaden their perspective. Innovation is
like a sky with horizons defined. These horizons can only be broaden through innovation.

Another way to manage innovation is to have creative people in order to produce ideas which are novel
and worthwhile; they should continuously update their innovation, find the gaps in their innovation and
get that innovation from right sources. Encouraging the people for innovation is not an easy task. What
the problem today with many of the organizations is that people with ideas have a sense of
irresponsibility. They think that their jobs are finished once the ideas have been suggested and it is the
work of someone else to find out the details and then implement the ideas. However implementation of
ideas is the finally desired goal. Therefore, it is needed to encourage the employees not to just producing
the ideas but also to implement them for generating value from them.

A challenge in Managing innovation is the development of an organization, which will foster innovation
and change. The development of such an organization itself is an innovative task and all the above ways
can help in inspiring innovation in an organization. Innovation, ingenuity, and focus these are the three
essentials of innovation.
Notable Nigerian Entrepreneurs and Social Entrepreneurs:
Some notable Nigerian entrepreneurs are:
Aliko Dangote
This Nigerian entrepreneur was born in 1957. He created the Dangote Group and is considered to be one
of the richest men in Africa. The Dangote group is a big organization that is into export, import,
manufacturing, real estate and philanthropy. Some of the products it deals with are: spaghetti, macaroni,
sugar, salt, rice textile materials, while the Group is also into transportation, packaging, and even security.
The Dangote Group imports sugar, rice, fish, and cement, fertilizer and building materials. While it
exports cotton, cocoa, cashew nuts, sesame seed, ginger and gum. Aliko Dangote has contributed
tremendously to the economic development of Nigeria and has greatly assisted in reducing the rate of
unemployment in the country by providing employment to Nigerian graduates and even other categories
of labour (Africansuccess.org, 2008; Nairaland.com, 2010).

Chidi Anyaegbu

This entrepreneur is regarded as ‘King’ of the transport industry. He founded the Chisco Transport
Limited which is one of the biggest in the Nigerian transport industry. Over the years, Chisco Transport
Limited grew to become the Chisco Group. The Chisco group is into variety of businesses such as: oil and
gas, finance, hospitality, real estate, import and export. Apart from this he has also contributed
tremendously to the development of the nation through various philanthropic activities. For instance, he
established a foundation to take care of his philanthropic interests and also built a Faculty of Business
building for Transport Studies at the Nnamdi Azikiwe University, Awka (Prince Society, 2009;
Nairaland.com, 2010; Onyima, 2010).

Chris Ejiofor
This is an entrepreneur in the importation and marketing of car or auto batteries. He established Dimaps
Batteries and has written extensively about usage and maintenance of batteries in Nigeria.

Mike Adenuga Junior

This entrepreneur was born in 1953. He has business in various industries such as banking, oil and
telecommunications. He owns the Consolidated Oil Company, which is the first indigenous company to
strike crude in December 1991. Consolidated Oil Company is into crude oil drilling, refining and
marketing. He also owns the Equatorial Trust Bank and created one of the main telecommunications
companies in Nigeria (Globacom), against all odds. Globacom Limited was created after he failed to
penetrate the telecommunications industry in 1999 with his first telecommunications company-
Communications Investment Limited, (CIL) because his conditional license was revoked. However, in
2002 he won the bid for the Second National Operator (SNO) license. This was a better strategic business
option for him because the SNO has a wider range of operations and this gave Globacom the right to
serve as international gateway for telecommunications in Nigeria and also operate: digital mobile lines,
fixed wireless access phones and also operate as a national carrier. This entrepreneur was able to achieve
these entrepreneurial successes because he has a unique flair for risks and tenacity of purpose
(Africansuccess.org, 2010; Nairaland.com, 2010).

Obateru Akinruntan
This entrepreneur comes from the Royal family in Ondo State, Nigeria. He is a king in Yoruba land i.e. an
Oba hence he has the appellate HRH (i.e. His Royal Highness); and also a graduate of Business
Administration from Lead City University Ibadan. He created the Obat Oil and Petroleum Limited in
1981, a company that is into the marketing of petroleum nation-wide, and has the largest privately owned
oil depot and jetty in Africa. His business interests have grown steadily over the years to become the Obat
Group which has interests in petroleum, fishery, construction, tourism and hospitality, shipping,
consultancy services and water purification and production (Obateru, 2010; Nairaland.com, 2010).

Paul Okafor
This Nigerian entrepreneur established Elbe Pharma, an organization that deals with the importation and
marketing of pharmaceutical products such as Amalar anti malaria tablets, Solotone multivitamin etc.
nation-wide.

Razaq Okoya
This Nigerian entrepreneur created the Eleganza industries. An organization that has contributed
tremendously to national development through its assortment of consumer products such as biros and
coolers manufactured and marketed nation-wide (Nairaland.com, 2010).

Uche Uche Ohafia

This is another notable Nigerian entrepreneur in the shipping industry. He created the Trans Atlantic
Shipping Agency Limited. The company is into air freight, shipping line agency and charter services,
import and export agency, collateral management and warehousing services among others. Social
entrepreneurs And some notable Nigerian social entrepreneurs as identified by Osalor (2010) are:

Ada Onyejike
This is a female social entrepreneur who contributed to social development by launching the Girl Child
Art Foundation (GCAF) in the year 2000. This Foundation is concerned with enlightenment and
empowerment of the Nigerian young women between the ages of 8-25 years on issues such as: polygamy,
child trafficking, and child marriage through music, art and dance; with the ultimate aim of engineering
progressive change in the Nigerian society.

Durojaiye Isaac
He is the social entrepreneur with the slogan “Shit business is Good Business”. In 1999, he established
the DMT Mobile Toilets in Lagos. Prior to that period, Lagos State did not have enough public toilets to
cater for its teaming population. In order to help solve the social problem created by this inadequate toilet
facilities in Lagos State, Durojaiye established the DMT Mobile Toilets, which is an organization that
manufactures, hires out and maintain moveable toilets in Lagos State. Thereby promoting environmental
sanitation and creating job opportunities in Lagos State.

MARKETING PRACTICE AND ENTREPRENEURSHIP

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and
exchanging offerings that have value for customers, clients, partners, and society at large". It is the
process by which companies engage customers, build strong customer relationships, and create customer
value in order to capture value from customers in return. When we define marketing as the performance of
the activities that direct the flow of goods and services we mean just that: direct. Marketing should start with the
consumer, not the plant. Thus, marketing should determine what products are to be produced (product
development, design, and packaging), what prices to charge (credits and collection and pricing policies), and
where they are to be available (warehousing and transportation)—as well as selling and advertising.” Marketing
is the process of assessing customer needs, wants, preferences and demand: designing and producing
goods and services that will satisfy such needs, wants, preferences and demand and making the good
available to the customers at a profitable and affordable amount, at their convenient and preferred
location and time, and through the right awareness. Marketing is the sum of all the activities and
processes involved in moving goods and services from the producers to the customers. Marketing is
anything the company does that makes it to sell a product or sell more of a product. In other words, what
the company does to make the buyer buy a product or buy more of a product.

In sum, marketing embraces activities related to the product itself, the pricing, the distribution,
communication or promotion, post-sale activities, marketing research and sales forecasting. However, it
should be noted that for marketing or exchange to take place, the following conditions must subsist (a)
there has to be two or more parties who have unsatisfied wants, (b) some products or services and money
to exchange, and (c) some means of communication between the parties involved.

Purpose of Marketing

1. Attention

Getting the target audience to pay attention to your product or services is one of the main objectives of

setting up an enterprise. What better way is there to gather people’s attention on a new—or existing—

product than marketing it?

2. Engagement

All businesses want people to know about what they offer and ultimately engage more with the product or

service.

As you keep displaying your products and services, people become aware of them, registering in their

minds. As a result, when the need for such goods or services arises, your products will be remembered

and recommended. In the long run, the engagement your business receives increases.

3. Reputation
Generally, people are more likely to purchase a trusted product or service that has been tested and is

popular in the market. This is precisely what every business out there needs: a positive, burgeoning

reputation, which marketing can help achieve.

4. Conversion

As people start paying attention to your business, you attract more visitors. A good marketing strategy

will ensure that those visitors are converted into loyal customers, which drives up sales and revenue.

5. Relationships

When marketing brings the desired results that customers seek, there is an improvement in the
relationship between you and your customers.

The trust they develop in your products and services ensures that they relate more with what you can offer
while sticking around for the long term.

6. Inform

Marketing your products will tell the public about what you offer. After all, people will only purchase
products that they know about.
Marketing creates brand, product, and problem awareness.

7. Enablement

Marketing empowers stakeholders with frameworks and resources that can help in generating revenue.

8. Data

The marketing process involves publishing, measuring, learning, and iterating. In this way, marketing can

help you gather data that you can use to improve your product, conversions, and customer experiences.

9. Research

Marketing enables you to dive into the market and learn the demands of the larger audience. With this

research, you can optimize and evolve accordingly with the market demands.
10. Innovation

Marketing focuses on tasks that increase sales, and these comprise the products and services aligned with

the clients’ needs. Through this, marketing assumes a comprehensive role, including the famous 4Ps of

marketing.

Basic Concepts Underlying Marketing

a. Needs
The most basic concept underlying marketing is that of human needs. Human needs are states of felt
deprivation. These needs include basic physical needs for food, clothing, shelter and safety; social
needs for belonging and affection; and individual needs for knowledge and self-expression. The
needs are in-built in human nature itself. It is not invented by marketers. That is, they naturally exist
in the composition of human biology and human condition. When the needs are not satisfied, a
person will try to reduce the need or look for an object that will satisfy it.

b. Wants
Human wants are desires for specific satisfaction of deeper needs. For example, a man in the village
need rain, need food and wants fertilizer. Also, a man may want yam, rice, body cream, a bag, a
wrist-watch, etc. -but needs money. Human needs may be few, but wants are numerous. These wants
are continually shaped and reshaped by social forces and institutions such as families, church,
schools and business corporations. Marketers don’t create needs, needs pre-exist in markets.
Marketers along with other inferential in the society, influence wants. They suggest and inform
consumers about certain products and persuade them to purchase, stressing on the benefits of such
products.

c. Demands
People have almost unlimited wants, but limited resources. The want to choose products that provide
the most value and satisfaction for their money. When backed by purchasing power, wants become
demands. That is, demands are wants for specific products that are backed up by an ability and
willingness to buy them. For example, many desire a car such as Mercedes Benz, Toyota, BMW,
Honda etc., but only a few are really willing and able to buy one. It is therefore important for
marketing executives to measure not only how many people want their company’s products, but also
measure how many of them would actually be willing and able to buy them.

d. Products
People, normally, satisfy their wants and need with products offered into the market. Broadly, a
product can be defined as anything that can be offered to someone to satisfy a need or want.
Specifically, a product can be defined as an object, service, activity, person, place, organisation or
idea. It should be noted that people do not buy physical objects for their own sake. For examples, a
lipstick is bought to supply service-aid looking good (beauty); toothpaste for whiter teeth – prevent
germs; aid fresh breath or sex appeal. The marketer’s job is to sell the service packages built into
physical products. If one critically looks at physical products, one realises that their importance
depend, not so much in owning them, as in using them to satisfy our wants. For example, we do not
buy a bed just to admire it, but because it aids resting better.
e. Exchange
 Marketing takes place when people decide to satisfy needs and wants through exchange. Exchange
is, therefore, the act of obtaining a desired object from someone by offering something in return.
Exchange is only one of the many ways people can obtain a desired object. For example, hungry
people can find food by hunting, fishing or gathering fruits.
They could offer money, another food or a service in return for food. Marketing focuses on this last
option. As a means of satisfying needs, exchange has much in its favour, people do not have to
depend on others, nor must they possess the skills to produce every necessity for them. They can
concentrate on making things they are good at making and trade the needed items made by others.
Thus, exchange allows a society to produce much more than it would. However, Kotler (1984) states
that for exchange to take place, they must satisfy five conditions, namely:
i. there must be, at least, two parties
ii. each party has something that may be of value to the other party
iii. each party is capable of communication and delivery
iv. each party is free to accept or reject the offer; and
v. each party believes it is appropriate or desirable to deal with the other party.
These five conditions make exchange possible. Whether exchange actually takes place, however,
depends on the parties coming to an agreement. If they agree, it is often concluded that the act of
exchange has left both of them better off, or at least not worse off. Hence, exchange creates value,
just as production creates value. It gives people more consumption possibilities.
f. Markets
A market is defined as a set of all actual and potential buyers of a product and service. These buyers
share particular needs or wants that can be satisfied through exchange. The size of a market depends
on the need of people with common needs, and who have resources to engage in exchange, and are
willing to offer these resources in exchange for what they want. To the African, the word ‘market’,
almost invariably, means the market place where buyers and sellers gather to exchange their goods-
whether it is a period market as in the rural areas or daily market, mostly found in the urban areas.
However, economists often use the term to refer to a collection of buyers and sellers who transact in
a particular product class, such as clothing market, electronic market, cattle market, etc.

g. Marketers
A marketer is someone seeking a resource from someone else, and willing to offer something of
value in exchange. A marketer could be a buyer and/or a seller.

Buying Motives
Buying motive is the urge or motive to satisfy a desire or need that makes people buy goods or services.
Behind every purchase there is a buying motive. They are forces that pushes of influnces the buyers to
desire a product. It refers to the thoughts, feelings, emotions and instincts, which arouse in the buyers a
desire to buy an article. A buyer does not buy because s/he has been persuaded by the salesman, but s/he
buys for the aroused desire in him or her. Motives should be distinguished from instincts. A motive is
simply a reason for carrying out a particular behaviour and not an automatic response to a stimulus,
whereas instincts are pre-programmed responses, which are inborn in the individual and involuntary.
For example: Thirst is an instinct but aspire to buy a bottle of mineral water to quench thirst is a motive.
Hunger is also an instinct whereas desire to purchase bread is a buying motive.
Buying Motives are those influences or considerations which provide the impulse to buy, induce action
and determine choice in the purchase of goods and services.
Types of Buying motives
Buying motives can be categorized into 2 types as follows:
Product Buying Motives
Patronage Buying Motives

Product Buying Motives:

Product buying motives refer to those influences and reasons, which prompt (i.e. induce) a buyer to
choose a particular product in preference to other products. They include the physical attraction of the
product (i.e. the design, shape, dimension, size, colour, package, performance, price etc. of the product) or
the psychological attraction of the product (i.e. the enhancement of the social prestige or status of the
purchaser through its possession), desire to remove or reduce the danger or damage to life or body of the
possessor, etc. In short, they refer to all those characteristics of a product, which induce a buyer to buy it
in preference to other products. Product buying motive is sub-divided into. These are product rational
motive and Product emotional motive.
Product rational motive: When a buyer decides to buy a certain thing after careful consideration (i.e. after
thinking over the matter consciously and logically), s/he is said to have been influenced by rational
product buying motives. Rational product buying motives include security, economy, low price,
suitability, utility, durability, convenience etc.
Product emotional motive: When a buyer decides to purchase a product without thinking over the matter
logically and carefully (i.e., without much reasoning), she is said to have been influenced by emotional
product buying motives. This include prestige, imitation, affection, comfort, ambition, distinctiveness,
pleasure, status, habit etc.

Patronage Buying Motives

These are the factors or characteristics that influence a person to purchase a product from particular shop
instead of purchasing from other shops selling the same product. It can be divided into two categories:
Emotional and Rational.
Emotional Patronage Motive: If a person purchases a product from a particular shop without thinking
much about other shops, then he or she is said to have persuaded by emotional patronage buying motives.
These motives include ambience of shop, showcase of products, recommendations by others, prestige,
habit, imitation etc.
Rational Patronage Motive: If a person purchases a product from a shop after complete analysis and
reasoning then he or she is said to have persuaded by rational patronage buying motives. The rational
patronage buying motives include convenience, low price, credit availability, more services, efficiency of
the seller, wide variety, treatment, reputation.
Importance of buying motives
Understanding the buying motive of a customer is essential for a company as it helps the company to
target the customer better. It means that the customer requires a particular product to fulfill a certain need.
No matter how good a product is or how good the marketing is, unless the customer has a need it would
not matter. This makes buying motive extremely important in business. By understanding this motives,
marketers and entrepreneurs can better appeal to their target audience. This helps you to be closer to your
customers and to provide products that address their pain points certain. In this context, recognizing why
buyers make these decisions allows you to better speak to their needs and challenges. That is providing
products that satisfy their needs.
The Buying Process
In any given transaction, there must be a seller and a buyer. Although in Nigeria, most often, buyers are
always more than sellers, therefore demand is always more than supply. Thus, suppliers determine the
market the goods should be sold, the quantity and price to be sold. Hence, buyers have to take whatever is
offered; but in economies like that of the U.S.A., Japan, U.K. etc., buyers pick and choose from the very
many available sources, based on the peculiarities of their demand. Buying is not an act. It is a process of
many related activities. The buying decision is only one action in the process. The process is a problem
solving approach. Once the process has started, potential buyers can withdraw, at any stage, in order to
actualise purchase, while some stages can be skipped. A total stage approach is likely to be used only in
certain buying situations. Infrequent behaviour is a routine affair in which the aroused need is satisfied, in
the usual manner, by repurchasing the same brand. However, if something changes appreciably, such as
price, product, services etc., buyers may reopen the full decision process and consider alternative brands
or products. The buying process is shown below, in form of a flow chart.

Felt Needs (problem Recognition) > Search For Alternatives > Purchase Activities > User’s
Behavior > post Purchase evaluation.

a. Felt need
The process stage is when an unsatisfied need (motive) creates inner tension. This may be a
biological need, aroused internally (e.g. the person feels hungry); or the need may have been
dormant until it was aroused by an external stimulus, such as an advertisement or the sight of the
product. Once the need has been recognised, often, consumers become aware of conflicting
motives or competitive uses for their resources of time or money. Often times, there are
conflicting needs, buyer must resolve these conflicts before proceeding.
b. Searching for alternatives
Once a need has been recognised, both product and brand alternative must be identified;
supposing Mr. Abu has a need to be in Lagos- from Minna. The available alternatives are:  to go
by bus in the night (luxury bus)  to go by taxi  to go by bus in the day time  to go by train  to
go by airplane, etc. The search for alternative and the methods used in the search are influenced
by such factors as:  costs-in terms of time and money  how much information the consumer
already has from past experiences  the amount of the perceived risk if a wrong selection is
made. Once the entire reasonable alternatives have been identified, the consumer must evaluate
each one, in preparation to making a purchasing decision. The criteria consumers use in their
evaluation include past experience and attitude toward various brands, others include- family’s
opinions and reference groups.
c. Purchasing activities
After searching and evaluating, the consumer at some point must decide whether or not to buy.
Therefore, anything the marketer can do to simplify decision making will be attractive to buyers,
because most people find it difficult to make a decision. Sometimes several decision situations
can be combined, marketed as one package. To do a better marketing job, a marketer needs to
know the answers to many questions regarding consumer’s shopping behaviours. At this point in
 the buying process, marketers are trying to determine the consumer patronage buying motives.
Some of the reasons for shopping at certain stores are as listed below:
1. Convenience of location, rapidity of service, ease of locating merchandise etc.
2. Price
3. Assortment of merchandise
4. Services offered
5. Alternative store appearance
6. Caliber of sales personnel

d. User’s Behavior
The marketer must learn the use of a product and who uses the products, where they are used,
when they are used, and the other items with which they are used. All these are geared towards
identifying marketing opportunities and better ways of handling these marketing opportunities.
e. Post Purchase Evaluation
Once a consumer is satisfied with the use of a product, he/she will repeat its purchase and
become loyal to the company’s product. All the behaviour determinants and the step in the
buying process, up to this point, operate before or during the time a purchase is made. However a
buyer’s feeling, after the sale is significant for a marketer. People may feel dissatisfied with the
product purchased because of one reason or the other. Typically, buyers experience some post-
purchase anxieties known as cognitive dissonance.
Post-purchase cognitive dissonance occurs because each of the alternatives considered by the
consumer usually has both advantages and limitations. Thus, post-purchase process should be,
critically, studied and evaluated in order to sustain buyers brand loyalties.

Factors Affecting Consumer Behavior

Consumer Behaviour is influenced by many different factors. The five major factors that influence
consumer behaviour are as follows –
Psychological Factors
Human psychology plays a major role in understanding consumer behaviour. Difficult to measure, but
psychological factors are powerful enough to influence a buying decision.
Some of the important psychological factors are as follows –
Motivation: Motivation to do something often influences the buying behaviour of the person.
Individuals have different needs such as social needs, basic needs, security needs, esteem needs, and self-
actualization needs. Out of all these, the basic needs and security needs take a position above all other
needs, and these motivate a consumer to buy products and services.
Perception: Our perception is shaped when we gather information regarding a product and examine it to
generate a relevant image regarding a certain product. Whenever we see an advertisement, review,
feedback, or promotion regarding a product, we form an image of that item. As a result, our perception
plays an integral role in shaping our purchasing decisions.
Learning: When a person buys a product, the general tendency is to learn something more about the
product. Learning also comes over a period through experience. This learning depends on skills and
knowledge. While skill can be gained through practice, knowledge can be acquired only through
experience. Learning can be either conditional or cognitive. In conditional learning, the consumer is
exposed to a situation continuously to develop a response towards it. Whereas in cognitive learning, the
consumer applies his/her knowledge and skills to find satisfaction from the product that she/he buys.
Attitudes and Beliefs: Consumers’ attitudes and beliefs also influence the buying decision. Based on
this attitude, the consumer behaves in a particular way towards a product. This attitude plays a significant
role in defining the brand image of a product. Hence, marketers try hard to understand the attitude of a
consumer to design their marketing campaigns.
Social Factors:
Humans are social beings, and the society or the people they live around influence their buying
behaviour. Human beings try to imitate other humans and nurture a desire to be socially accepted. Hence,
their buying behaviour is influenced by other people around them. These factors are considered as social
factors.
Some of the social factors are as follows –
Family: Family plays a significant role in shaping the buying behaviour of a person. A person builds
his/her preferences from his childhood by watching their family buy certain products and continues to
buy the same products even when they grow up.
Reference Groups: A reference group is a group of people with whom a person associates himself.
Generally, all the people in the reference group have common buying behaviour and influence each
other.
Roles and status: A person is influenced by the role that he holds in the society. If a person is in a high
position, his buying behaviour will be influenced largely by his status. A person who is a Chief
Executive Officer in a company will buy according to his status while a staff or an employee of the same
company will have different buying pattern.

Cultural Factors
A group of people is associated with a set of values and ideologies that belong to a particular community.
People coming from particular communities have behaviours highly influenced by their culture. Cultural
factors also include the concepts of subculture and social class.
Personal Factors
Factors that are personal to the consumers influence their buying behaviour. These personal factors vary
from person to person, thereby producing different perceptions and consumer behaviour. Some of the
personal factors include –
Age: The buying choices of individuals depend on which age group they belong to. Elderly people will
have totally different buying behaviours as compared teenagers.
Income: Income influences the buying behaviour of a person. Higher income gives higher purchasing
power to consumers. When a consumer has higher disposable income, it gives more opportunity for the
consumer to spend on luxurious products. Whereas low-income or middle-income group consumers
spend most of their income on basic needs such as groceries and clothes.
 Occupation: Occupation of a consumer influences the buying behaviour. A person tends to buy things
that are appropriate to this/her profession. For example, a senior corporate professional would tend to
buy formal clothing whereas a creative designer would tend to spend on casual wear.
Lifestyle: Lifestyle is an attitude, and a way in which an individual stay in the society. The buying
behaviour is highly influenced by the lifestyle of a consumer. Someone who leads a healthy lifestyle
would spend more or healthy food alternatives.
Economic Factors:
Consumer buying habits greatly depend on the economic situation of a country or a market. When a
nation’s economy is strong, it leads to a greater money supply in the market and higher purchasing power
for consumers. Whereas a weak economy reflects a struggling market that is impacted by unemployment
and lower purchasing power. Some of the important economic factors are as follows –
Personal Income: When a person has a higher disposable income, the purchasing power increases
simultaneously. Disposable income refers to the money that is left after spending towards the basic needs
of a person. When there is an increase in disposable income, it leads to higher expenditure on various
items. But when the disposable income reduces, parallelly the spending on multiple items also reduced.
Family Income: Family income is the total income from all the members of a family. When more
people are earning in the family, there is more income available for shopping basic needs and luxuries.
Higher family income influences the people in the family to buy more.
Consumer Credit: When a consumer is offered easy credit to purchase goods, it promotes higher
spending. Sellers are making it easy for the consumers to avail credit in the form of credit cards, easy
instalments, bank loans, hire purchase, and many such other credit options. When there is higher credit
available to consumers, the purchase of comfort and luxury items increases.
Liquid Assets: Consumers who have liquid assets tend to spend more on comfort and luxuries. Liquid
assets are those assets, which can be converted into cash very easily. Cash in hand, bank savings and
securities are some examples of liquid assets. When a consumer has higher liquid assets, it gives him
more confidence to buy luxury goods.
Savings: A consumer is highly influenced by the amount of savings he/she wishes to set aside from his
income. If a consumer decided to save more, then his expenditure on buying reduces. Whereas if a
consumer is interested in saving more, then most of his income will go towards buying products.

Marketing Mix
Marketing mix is the combination of the products, pricing, distribution and awareness decisions used by
a firm to differentiate itself from the competition. The marketing mix describes the business approach to
influence profitable customer actions by selling a customer’s product or service, at a desired price
through the right distribution channel and through effective awareness. . The marketing mix is the
combination of the 4 Ps of marketing (Product, Price, Place, and Promotion).

The 4 Ps of marketing are:

1. Product: Anything sold for profit

2. Price: The monetary value charged in exchange for a good or service
3. Place: The geographical area where a product is available
4. Promotion: Advertising, social media marketing, public relations, and media placement
 Marketers use the mix framework to:

1. Create products and services that solve problems and provide value for ideal target customers
2. Assign monetary value the products that will influence target customers to purchase
3. Choose distribution channels through which the business will sell its products to target customers
4. Market promotional activities that will reach and influence target customers to take action.

Product
A product is anything that can be offered to a market to satisfy the desire or need of a customer. A
product can be good, service or idea that can be offered to the market to satisfy the customers needs or
wants.
Product Strategy
A product strategy is a grand plan describing what a business hopes to accomplish with its product and
how it plans to do so. The strategy should answer key questions such as who the product will serve
(personas), how it will benefit those personas, and the company’s goals for the product throughout its life
cycle. It defines the unique value proposition of a new product, its target audience, and how the product
will meet key goals across its entire lifecycle. It explains what you or the business aim to achieve with a
product such as how the product will be created, how it will impact the buyers and how it helps achieve
your business goals.
The purpose of product strategy is to find product market fit that is the alignment between customer needs
and your product. Because if the market — your customers — truly needs or wants your product, then
you in for better profits and stability.
A product strategy is important because it enables you to:
Align around your goals
Chart your wayford
Prioritise the right work
Stay focused and agile
Delivers customers needs
Create value for customers and the business

Elements of A Product Strategy

There are no hard and fast rules to the elements that go into a product strategy, but it can include:

 Design - What is the target product market? What design feature(s) will be added that makes it stand
out from other companies? For example, attractive product design draws more customers towards the
product.
 Features - What features will be added to increase the benefits offered to the target market? How does
the product differ from the other competing companies products? "Marketing is not about providing
products or services, it is essentially about providing changing benefits to the changing needs and
demands of the customer" Product features differentiate amongst competitors.
 Quality - A product's quality should be consistent to make sure that the product meets the
expectations of their target market. Thus, strengthening the firm's reputation.
 Branding - Brands have the power of instant sales and they convey the message of confidence,
quality and reliability to their target market. It is also used a tool for companies to differentiate itself
from their competitors.
 Target Market - Identify who is being sold to. Who should the product appeal to? How will
customers view the product in the marketplace? "The organization's marketing task is to determine
the needs, wants and interests of target markets and to achieve the desired results more effectively
and efficiently than competitors, in a way that preserves or enhances the consumer's or society's well-
being."
 Positioning - How does the company plan to position its product in the market? Different factors will
need to be considered when the product is positioned in the marketplace as it will impact consumers
perceptions about the product and brand. For example, how to price the product and the quality of it

Types of Product Strategy

Product strategies tend to follow one of five different philosophies in their design, purpose, intended
audience, and pricing. Keep in mind that product strategies aren’t limited only to these five themes, and
some strategies mix and match approaches.
1. Unique Value Differentiation

Unique value differentiation is a classic approach to product strategy that puts customer needs first. It
identifies what customers need that the market doesn’t currently offer, then fills that gap.

2. Market Leader/Demand Generation

Market leadership and demand generation product strategies blaze a new trail in their markets. These
product strategies rely on their products’ innovation and ability to create demand for a new product
category.

3. Comparative

A comparative product strategy focuses on building an alternative product to a market leader or solving
an old problem in a new way. While a product in one of these strategies builds on old ideas, it
differentiates itself through pricing, quality, or features.

4. Niche

As opposed to a mass market approach, a niche product strategy solves a problem for a select audience.
Although it targets a smaller audience than usual, the audience it targets can’t find the solution to their
needs anywhere else.

5. Cost-Based
A cost-based product strategy can take one of two approaches: offer high quality and high price, or offer
low quality and low price. These approaches respectively appeal to customers looking for luxury items or
customers in search of a deal.

Product development process

The product development process is a six-stage plan that involves taking a product from initial concept to
final market launch. This process helps break down tasks and organize cross-departmental collaboration.
Find out how to implement a process of your own.

Product development is both an exciting and difficult endeavor. From initial ideation to research and
prototyping, no two product launches are the same. However, there’s a general process that can help you
get started with the product development process.
The product development process describes the six steps needed to take a product from initial concept to
final market launch. This includes identifying a market need, researching the competition, ideating a
solution, developing a product roadmap, and building a minimum viable product (MVP).
The product development process has evolved in recent years and is now commonly used by dividing
each step into six separate phases. This helps better organize the process and break individual deliverables
into smaller tasks. Product development is the process of building a new product, from ideation all the
way through launch. Product development begins with those initial brainstorming sessions, when you’re
just discussing a budding idea. From there, the process is creative but strategic, and you may have seen it
done in a million different ways. But without clear organization, it can be hard to mesh creativity and
strategy effectively. Which is where the product development process comes in a six step framework to
help you standardize and define your work.
Product development And Product management
Though they sound almost identical, there's an important difference between product development and
product management. Product development describes the process of building a product, where product
management is the overseeing of that work. It's a slight difference, but an important distinction. A product
manager, who often oversees a team that is in the product development process, will lead product
management.

Stages of product development

 Not only does the product development process help simplify a launch, but it also encourages cross-team

collaboration with teamwork and communication at the forefront of the process.

1. Idea generation (Ideation) The initial stage of the product development process begins by generating
new product ideas. This is the product innovation stage, where you brainstorm product concepts based on
customer needs, concept testing, and market research.

It’s a good idea to consider the following factors when initiating a new product concept:
 Target market: Your target market is the consumer profile you’re building your product for. These are
your potential customers. This is important to identify in the beginning so you can build your product
concept around your target market from the start.
 Existing products: When you have a new product concept, it’s a good idea to evaluate your existing
product portfolio. Are there existing products that solve a similar problem? Or does a competitor offer a
product that doesn’t allow for market share? And if yes, is your new concept different enough to be
viable? Answering these questions can ensure the success of your new concept.
 Functionality: While you don’t need a detailed report of the product functionality just yet, you should
have a general idea of what functions it will serve. Consider the look and feel of your product and why
someone would be interested in purchasing it.
 SWOT analysis: Analyzing your product strengths, weaknesses, opportunities, and threats early in the
process can help you build the best version of your new concept. This will ensure your product is
different from competitors and solves a market gap.
 SCAMPER method: To refine your idea, use brainstorming methods like SCAMPER, which involves
substituting, combining, adapting, modifying, putting to another use, eliminating, or rearranging your
product concept.
To validate a product concept, consider documenting ideas in the form of a business case. This will allow
all team members to have a clear understanding of the initial product features and the objectives of the
new product launch.
2. Product definition Once you’ve completed the business case and discussed your target market and
product functionality, it’s time to define the product. This is also referred to as scoping or concept
development, and focuses on refining the product strategy.
During this stage, it’s important to define specifics including:
 Business analysis: A business analysis consists of mapping out distribution strategy, ecommerce
strategy, and a more in-depth competitor analysis. The purpose of this step is to begin building a clearly
defined product roadmap.
 Value proposition: The value proposition is what problem the product is solving. Consider how it differs
from other products in the market. This value can be useful for market research and for developing your
marketing strategy.
 Success metrics: It’s essential to clarify success metrics early so you can evaluate and measure success
once the product is launched. Are there key metrics you want to look out for? These could be
basic KPIs like average order value, or something more specific like custom set goals relevant to your
organization.
 Marketing strategy: Once you’ve identified your value proposition and success metrics, begin
brainstorming a marketing strategy that fits your needs. Consider which channels you want to promote
your product on such as social media or a blog post. While this strategy may need to be revised depending
on the finished product, it’s a good idea to think about this when defining your product to begin planning
ahead of time.
Once these ideas have been defined, it’s time to begin building your minimum viable product (MVP) with
initial prototyping.
3. Prototyping during the prototyping stage, your team will intensively research and document the
product by creating a more detailed business plan and constructing the product.
These early-stage prototypes might be as simple as a drawing or a more complex computer render of the
initial design. These prototypes help you identify areas of risk before you create the product.
During the prototyping phase, you will work on specifics like:
 Feasibility analysis: The next step in the process is to evaluate your product strategy based on feasibility.
Determine if the workload and estimated timeline are possible to achieve. If not, adjust your dates
accordingly and request help from additional stakeholders.
 Market risk research: It’s important to analyze any potential risks associated with the production of
your product before it’s physically created. This will prevent the product launch from being derailed later
on. It will also ensure you communicate risks to the team by documenting them in a risk register.
 Development strategy: Next, you can begin working through your development plan. In other words,
know how you’ll be assigning tasks and the timeline of these tasks. One way you can plan tasks and
estimate timeline is by using the critical path method.
 MVP: The final outcome of the prototyping stage is a minimum viable product. Think of your MVP as a
product that has the features necessary to go to launch with and nothing above what’s necessary for it to
function. For example, an MVP bike would include a frame, wheels, and a seat, but wouldn’t contain a
basket or bell. Creating an MVP can help your team execute the product launch quicker than building all
the desired features, which can drag launch timelines out. Desired features can be added down the road
when bandwidth is available.
Now it’s time to begin designing the product for market launch.
4. Initial design during the initial design phase, project stakeholders work together to produce a mockup
of the product based on the MVP prototype. The design should be created with the target audience in
mind and complement the key functions of your product.
A successful product design may take several iterations to get just right, and may involve communicating
with distributors in order to source necessary materials.
To produce the initial design, you will:
 Source materials: Sourcing materials plays an important role in designing the initial mockup. This may
entail working with various vendors and ordering materials or creating your own. Since materials can
come from various places, you should document material use in a shared space to reference later if
needed.
 Connect with stakeholders: It’s important to keep tight communication during the design phase to verify
your initial design is on the right track. Share weekly or daily progress reports to share updates and get
approvals as needed.
 Receive initial feedback: When the design is complete, ask senior management and project stakeholders
for initial feedback. You can then revise the product design as needed until the final design is ready to be
developed and implemented.
Once the design is approved and ready to be handed off, move onto the validation phase for final testing
before launching the product.
 5. Validation and testing to go live with a new product, you first need to validate and test it. This ensures
that every part of the product from development to marketing is working effectively before it’s released to
the public.
To ensure the quality of your product, complete the following:
 Concept development and testing: You may have successfully designed your prototype, but you’ll still
need to work through any issues that arise while developing the concept. This could involve software
development or the physical production of the initial prototype. Test functionality by enlisting the help of
team members and beta testers to quality assure the development.
 Front-end testing: During this stage, test the front-end functionality for risks with development code or
consumer-facing errors. This includes checking the ecommerce functionality and ensuring its stable for
launch.
 Test marketing: Before you begin producing your final product, test your marketing plan for
functionality and errors. This is also a time to ensure that all campaigns are set up correctly and ready to
launch.
Once your initial testing is complete, you’re ready to begin producing the final product concept and
launch it to your customer base.
6. Commercialization Now it’s time to commercialize your concept, which involves launching your
product and implementing it on your website.
By now, you’ve finalized the design and quality tested your development and marketing strategy. You
should feel confident in your final iteration and be ready to produce your final product.
In this stage you should be working on:
 Product development: This is the physical creation of your product that will be released to your
customers. This may require production or additional development for software concepts. Give your team
the final prototype and MVP iterations to produce the product to the correct specifications.
 Ecommerce implementation: Once the product has been developed and you’re ready to launch, your
development team will transition your ecommerce materials to a live state. This may require additional
testing to ensure your live product is functioning as it was intended during the previous front-end testing
phase. Your final product is now launched. All that’s left is to measure success with the initial success
metrics you landed on.

PRICE
This is the amount of money expected and given in exchange for a product.
Objectives of Pricing
Before deciding on a pricing strategy, the company needs to consider its pricing objectives. Pricing
objectives should be aligned with the company's overall marketing and corporate objectives. Some of the
different types of pricing objectives may include:

 Attracting new customers to increase revenues,

 Retaining existing customers,
 Preventing competitors from entering the market,
 Preventing competitors from gaining market share,
 Attracting customer attention to the release of a new product or brand,
 Increasing sales of a specific product line.

Pricing Strategie

1. Cost-Plus Pricing Strategy One way to price a product is to add a fixed percentage to the
manufacturing costs for each unit. This pricing technique is known as “cost plus” or “markup pricing.” As
a seller, you would calculate the fixed and variable expenses incurred in making your goods and then
apply the markup percentage to that cost. This approach is popular since it’s simple to defend and almost
always results in a level playing field for all participants.
2. Competitor-Based Pricing Strategy Competitive pricing is the practice of setting your product or
service prices based on the pricing of your competitors in your market or niche rather than on your
company’s costs or desired profit margins. Sometimes this means just raising your prices, but you also
can offer better terms of payment as an alternative.
3. Value-Based Pricing Strategy The method of determining your rates, known as value pricing, considers
how much your customers value what you provide and adjusts your prices accordingly. You must employ
a marketing mix to retain sales and deliver more value to your clients in the face of increased competition
or a recession. Due to the perceived worth of the product or service, buyers flock to this price strategy
over the competition. Customers don’t care how much it costs a corporation to manufacture a product;
what matters is that the client believes they are getting a good deal when they buy it.
4. Loss Leader Pricing Strategy Loss leader pricing is a marketing strategy where one or more retail
goods are chosen and sold below cost – at a loss to the retailer – to entice customers. Loss leads are items
offered at deeply discounted rates to draw customers into the business.5. Penetration Pricing Strategy
The penetration pricing strategy aims to draw customers by providing products and services at lower costs
than rivals. This tactic can take attention away from competing firms and lead to long-term contracts by
promoting brand recognition and loyalty. However, in the long run, brand recognition may lead to higher
earnings and help small businesses stand out from the crowd.
6. Everyday Low Pricing Strategy Retailers use “everyday low pricing” to maintain perpetually low
prices for their items rather than special promotions or sales. As a result, the daily low pricing strategy
aims to optimize sales by always giving the lowest prices on the market and anticipating huge sales
volumes.
7. Economy Pricing Strategy Economy pricing aims to get the most price-conscious customers to
purchase the product. Because they don’t have to pay for additional promotion or marketing expenditures,
businesses may price their products according to their manufacturing value.
8. Premium Pricing Strategy Businesses that charge premium prices do so because they have a specific
product or brand that no one else can match. Suppose you have a significant competitive edge and know
you can charge a higher price without being undercut by a product of comparable quality. In that case,
you should consider using this technique.
9. Skimming Pricing Strategy Price skimming is a dynamic pricing strategy businesses use to increase
sales of new goods and services. Price skimming is a strategy usually employed at a new product’s debut.
This strategy aims to maximize income to the greatest extent possible when customer interest in the
product is strong, and your company faces low competition.
10. High-Low Pricing Strategy High-low pricing is a strategy where a business focuses on marketing
campaigns to entice customers to make purchases. For example, a company charges a high price for a
product and then lowers the cost through promotions, markdowns, or clearance sales. A product’s pricing
fluctuates between “high” and “low” in a certain amount of time with this method.
11. Dynamic Pricing Strategy Dynamic pricing involves charging variable costs depending on who or
when you purchase your goods or service. Flexibility in pricing is one of this technique’s essential
features, which considers supply and demand. While dynamic pricing is widespread in e-commerce and
transportation, it isn’t appropriate for all businesses. The greatest dangers lay in implementing variable
prices with price-sensitive products and services.
Common Pricing Tactics
Discounts Pricing
Bundles Pricing
Psychological Pricing

Distribution- Place

Place as the third P’s of marketing means where or how the final consumers discover, purchase, and
receive your product. It answers which distribution channels you will use to store and get your products to
your final customers. This is same has your distribution channel.
Distribution is the process of getting the products or services from the manufacturer to the end users. You
could sell your product directly via an online store, for example. Or use indirect channels such as resellers
to get your products into your customers’ hands.

Distribution Strategy
Distribution strategy is the method used to bring products, goods and services to customers or end-users.

1. Indirect Distribution As its name suggests, indirect distribution means distributing products using
marketing intermediaries such as retailers or wholesalers, as Coca-Cola does. They’re responsible for
storing, displaying, and selling your products to your target customers.
2. Direct Distribution Direct distribution is when the manufacturer directly delivers products to
customers using a physical storefront or an online ecommerce site. For example, the Intimates
brand, Jumia, sells directly from its website and storefronts.
3. Intensive Distribution
Intensive distribution involves distributing using all available channels with the intent to make your
products available at all the places your target customers shop.

Detergent brands, for instance, use intensive distribution since their target consumers expect their
products to be readily available at their nearest retailers.

4. Selective Distribution
Selective distribution is when you sell your product using cherry-picked distribution channels targeting a
specific audience. For instance, selling certain salon-quality haircare products using hairdressers and
barbers only.
This approach allows you to work with resellers who align with your brand value to maintain a strong
brand image.

5. Exclusive Distribution

Exclusive distribution refers to selling your products with specific retailers only to create a sense of
exclusivity.

Channels of Distribution
A distribution channel is the network of businesses or intermediaries through which a good or service
passes until it reaches the final buyer or the end consumer. Distribution channels can
include wholesalers, retailers, distributors, and even the internet. Distribution can be direct, indirect or
hybrid.

Promotion
Promotion is the act of getting potential customers familiar with your product. It’s one of the core
practices of marketing.
Promotion Strategy
A promotion strategy is the plan and tactics surrounding a product’s promotion. It consists of the goals
behind your promotion and the steps you’ll take to promote your product with the most advantages
possible.

RELEVANCE OF SMEs TO THE INDIVIDUAL AND THE SOCIETY

One major characteristic of the Nigerian economic environment is the dominant influence of Government
in the production of goods and services and employment of labour. For several years, the economy has
been heavily driven by government spending with little private sector entrepreneurship initiative,
resulting in over dependence on the government for labour employment. This largely accounted for the
low-level private sector contribution to overall economic growth (Kanu and Onwukwe, 2008). The
Government collaborating with the private sector can help the economy to grow thereby improving the
standard of life of citizens. A nation cannot progress with only Government establishment without the
efforts of the private sector.

Ogbari (2004) held that the private sector in any economy holds the key to development and growth
because it has the capacity to expand to the point that real wealth is created and all surplus goods that are
produced exported to other lands. The foundation for achieving this is the establishment and management
of Small and Medium (Scale) Enterprises (SMEs).

The position of SMEs in the society has been identified as one of the most important catalysts in a
nation’s development. In fact, it is the major propeller of development of any nation. A country that needs
fast and rapid development should not neglect the crucial role of small scale industries in this direction.
According to Umar (2010), tobe a successful participant in today’s globalized system, Nigeria must
evaluate the history and urgently register the lesson and experiences of developed and economically
successful countries of the world, and adopt some or all the processes involved. Europe was the first
continent to discover modern technologies of sustainable development, and today most of European
countries are members of the well developed nations of the world. The North Americans later learned and
followed suit with the same results, and today we are witnessing the fast pace of quality development in
several countries classified as “developed”, especially in the South East Asian continent (Omofonwan,
2012). All these nations made head way through effective use of small scale industries to kick-start their
development programmes. In these countries, there are strong indigenous manufacturing and commercial
base with high level of skill acquisition. To this, Ogbari (2004) stressed that the backbone of these nations
is small-scale industries on which major foreign firms rely for their materials and intermediate goals for
their production lines.

Concept of Small and Medium Enterprises (SMEs):

The term Small and Medium Enterprises (SMEs) is a confusing concept in the sense that there has not
been a general consensus on what constitutes Small and Medium Enterprises. It means different things to
different people because the word “small” in this context is not quantified. By this, its definition varies
from one person to another and from one country to the other. However, all the definitions tend to address
a common understanding. Nwaogwugwu and Ugiagbe (2008) stated that no matter the kind of definition
given for small-scale business, the criteria are usually:
a. Size of paid employees
b. Size of capital invested including money, excluding the value of land
c. Sales turnover usually annually
d. Employment of machine power extended to power driven engines and use
e. Combination of any of the above
In Kenya, the term is known as Micro, Small and Medium-sized Enterprises (MSME).According to their
definition, Micro Enterprises are those who have 1 – 10 employees, Small – 10 – 50 and Medium 50 –
100 employees.

In South Africa, their national Small Business Amendment Act 26 of 2003 defined Micro and Small
Enterprises from different sector perspectives, varying from manufacturing to retail sectors. For them,
micro businesses are those with five or fewer employees and a turnover of up to R100,000 ZAR; very
small businesses employ between 6 and 20 staff while small business employ 21 – 50 staff with turnover
ranging fromR1m in the Agric sector to R13m in the catering,
Accommodation and other Trade sectors, with the manufacturing sector commanding a maximum
turnover of R32.Their medium sized businesses are those who employ between 100 – 200 employees
with a maximum turnover varying from R5m in the Agricultural Sector, R51m in the Manufacturing and
R64m in the Wholesale Trade, Commercial Agents and Allied Services Sector. In United Kingdom, a
company is regarded as being an SME if it has a turnover of less than £25m, employing fewer than 250
people, with a gross asset of less than £12.5m.In Canada, it is defined as one with fewer than 100 paid
employees and a medium-sized business as one with at least 100 and fewer than 500 employees.
In Nigeria, the Central Bank of Nigeria (CBN) in Aginah, Oguguo and Nwokocha (2013) defined SMEs
based on the asset base and number of staff employed. The criteria are on asset base equal to or less than
N5m, and staff strength equal to or less than 100 employees. The Federal Government Small Scale
Industry Development Plan of 1980 defined a small scale business in Nigeria as any manufacturing
process or service industry, with a capital not exceeding N150,000.00 in manufacturing and equipment
alone. The small-scale industries division of the Federal Ministry of Commerce and Industry (FMCI) in
Nwaogwugwu and Ugiagbe (2008) defined small-scale industries as establishments with capital
investment totaling N250,000 and staffed with between 50 and 150 employees.
This definition like many others, took cognizance of the size of capital invested and numbers of
employees. Aginah, Oguguo and Nwokocha (2013) highlighted the following as characteristics of a small
scale business.
a) The number of people/person employed. It is usually a small business, because small number of
people are employed.

b) Low annual business turnover, because initial capital is low, then annual turnover will also be
low.

c) Local operations for most small firms, the area of operation is local. The employees live in the
community in which the business is located.

d) The sales volume is minimal

e) Financial strength is relatively minimal

f) Managers are independent, and they are responsible only to themselves.

g) The managers are usually the owners of the businesses.

h) The owners actually participate in all aspects of the management (i.e. the management of the
enterprise is personalized).

i) They have relatively small market when compared with other industries.

j) The capital is mainly supplied by an individual or small group or individuals/persons or

shareholders.

k) They usually have one, but may have several shop locations all in the same city or metropolitan
areas.

Another characteristic of SMEs is that they are Business which are not likely to undertake research and
development (R&D) due to their low capital outlay.

The Role of Small Scale Businesses in the Development of Nigerian Economy

SMEs are very important to the growth and development of any nation. In the developed countries, SMEs
are recognized as the main engine for growth and development because of their significant contributions
to economic growth and development. It is not in doubt that most of the developed countries enjoying a
growing and booming economy attribute most of their achievements to a flourishing SMEs sector. Due to
their numerous numbers, size and nature of operations, the role of SMEs in promoting indigenous sources
of growth and strengthening the infrastructure for accelerated economic expansion and development has
been recognized. Therefore, SMEs play the following roles in the development of Nigerian nation among
others;
a. Employment Generation: “What are the jobs of the future, and where that come from will” is often
the question addressed. The short answer is that no one knows, but it is certain that small companies and
innovation will play a key role (Nicolescu, 2001). Majority of employment opportunities of any country is
in the area of small and medium enterprises especially in the aspect of middle and low manpower. An
essential attribute of SMEs consists in the fact that they constitute an important source of jobs. The
promotion of SMEs is seen as a major tool for boosting employment as they employ a larger number of
people per unit of investment capital than the large-scale capital- intensive enterprises.
The costs associated with the creation of jobs in SMEs are reduced when compared to the ones involved
in the creation of jobs in big companies. The politicians in Latin America, after focusing, for years, on
massive investments and courting multinational companies, began realizing that the SMEs are real
sources of job opportunities (Almeida, 2014). No wonder, Caner (2015) asserted
that SMEs create many jobs. Ugiagbe, Nwaogwugwu and Obuseh (2008), stressed that it was not a
misnomer to emphasis the saying that the small and medium scale enterprises generate more employment
opportunities than large businesses. They buttressed this by saying that because of the proliferation of
small and medium scale enterprises, they were more able to generate 95% of
employments, while 5% were employed by large scale enterprises. Supporting the role of SMEs in job
creation, Aginah, Oguguo and Nwokocha (2013) stated that a lot of small retail shops, cottages,
restaurants, poultry farms, and telecommunications/telephone shops have been established and managed
profitably by Nigerians who would have been unemployed till date. The
entrepreneurs have in turn provided jobs for other Nigerians who serve as support stafffor them. SMEs
generate new employment opportunities and also serve as the building blocks of the largest corporations
in developed countries. Eru (2014) held that small businesses help to stimulate economic growth by
providing employment opportunities to people who may not be employable by larger corporations.
b. Production of Entrepreneurs thereby encouraging self-reliance: Through SMEs, many
entrepreneurs (both Local, National and International) have emerged. Aginah et al (2013) opined that
SMEs encourage self-employment for many youths both in the rural and urban areas. They further
stressed that the spirit of successful entrepreneurship has taken over the mind of Nigerians, who believe in
themselves and in the goal of self-employment, instead of relying on government jobs. SMEs tend to
attract talents who invent new products or implement new solutions for existing ideas.
Through SMEs, many successful entrepreneurs have been produced,who have established their own
businesses, ran and managed them successfully.
In this direction, one should not forget people like Dangote, Mike Adenuga, Orji Kanu and a host of
others, and all started from small scale before attaining the height they are today.
c. Training Ground for Large Scale Business: Small scale businesses serve as a training ground for the
large scale businesses. Their school/training ground provides the opportunity for the acquisition of skills
for large number of workers. In this respect, they are involved in the establishment of manpower
development support schemes for training and retraining of entrepreneurs and business promoters. Aginah
et al (2013) believed that through the establishment
of manpower development support schemes, and their involvement in the training and retraining of
entrepreneurs, small scale industries have provided a pool of potential entrepreneurs and business people
who are well equipped to start and successfully manage industries whether small or large, not only in
Nigeria, but overseas.
d. Rural Development: The establishment and operations of SMEs in the rural areas, has given most of
Nigerian communities a face–lift. SMEs have stimulated rural development and the achievement of a
meaningful level of broad economic, social and political development. Their presence attracted the
provision of such social amenities like good access road, pipe borne water,
electricity, health care centres, adequate communication facilities such as telephones and internets to the
rural areas. According to Ugiagbe et al (2008), this would not have been that rapid if not for the small and
medium scale enterprises cited in these areas.Eru(2014) opined that small businesses
contribute to local economies by bringing growth and innovation to the community in which the
businesses are established.
The presence of SMEs in the rural areas has also helped in the reduction of mass exodus / migration of
the rural dwellers to the urban cities. By this, SMEs have become an effective means of mitigating rural –
urban migration and resource utilization.
e. Industrialization: The role of small scale industries in the development of indigenous technology
cannot be undermined. SMEs have been described as catalysts for growth and development of any nation.
The report of the observer “Small and Medium Enterprises in Europe 2003” claimed that SMEs serve as
engine of the economic growth. It is based on this that Ugiagbe et al (2008) put forward that the
establishment of small and medium scale enterprises in any
nation facilitates the growth and development of that country, because, it is believed that this type of
business is the engine room of development.
According to Almeida (2004) the specialists agree that the social networks, formal and informal, are vital
to the innovation process in SMEs. Ayozie (2001) specifically mentioned the role of SMEs in the
accelerated industrial development by enlarging the supply of entrepreneurs and the enlarging of small
and medium enterprise sector, which offers better potentials for employment
generation and wider dispersal of industrial ownership. They facilitate balanced industrial development in
that only such small scale ventures can easily be established in many rural areas. Therefore, any country
that wants to have arapid industrial growth should encourage SMEs. By this, it is evidenced that SMEs
have been the backbone, driving force and engine to the economic growth and industrial development.
f. Mobilization of saving/ Utilization of Idle Resources: The SMEs operating in the country have the
capability of mobilizing domestic savings and absorb the local resources which would have been lying
idle. Aginah et al (2013) held that SMEs contribution to the mobilization of domestic savings and
utilization of local resources is also a noticeable factor. Ugiagbe et al (2008) corroborated that the small
businesses are suitable for mobilizing savings for production purposes,
which may not be readily available and they are still able to use-up the resources/raw materials that would
have been lying idle. The large scale businesses also often benefit from SMEs within the same locality, as
many large scale businesses depend on small businesses for the completion of various business functions
through outsourcing.
g. Source of Raw Materials: SMEs help to link other sectors of the economy especially through the
supply of raw materials to the manufacturing sector. For example, those into agriculture like farmers,
fishermen, horticulturists sell their produce to those in manufacturing / production industries. Aginah et al
(2013) confirmed that they serve as good agents for disposal of industrial products and some services and
have contributed immensely to the production of raw
materials in the form of semi-processed good for use by bigger industries.
Furthermore, the SMEs contribute to the strengthening of linkages by producing intermediate products for
use in the large scale enterprises as the fuel and engine of entrepreneurial spirit and economic growth of a
nation.
h. Development of Local Technology: The small business is able to develop the local technology by
copying foreign technology and adapting to it locally (Ugiabe et al, 2008). Today many agricultural and
other tools are locally produced such as hoe, cutlass, matchet, shovel and spade. SMEs have become
abase for the development of appropriate technology and a veritable ground for skilled, unskilled and
semi-skilled workers.
i. Less Dependence on Imported Goods: The role of small scale businesses in the development of
Nigeria’s economy has made it very possible for firms to depend less on imported goods or materials.
They often, rather depend on locally made machinesand local raw materials as inputs. This can be
understood in the work of Oshagbenius (1985) who stated that non dependence of the
economy on imported raw materials has saved the foreign exchange earnings of the nation. Less
dependence on imported goods/materials helps in solving balance of payment problems which has an
attendant blessing of creating an interest in the promotion of home made products.
j. Income/Revenue Generation: Small scale businesses generate income/revenue to three distinct bodies
of the economy. They generate income in the form of salary / wages to the employees, profits to the
entrepreneur and tax and other statutory levies to the government. This helps to boost the country’s
national income. In this way small business ventures generate revenues and strengthen the Nigeria
economy. Small industries have a shorter gestation period and as a
result, yield quicker returns on investment (Yewande 1991). Although SMEs may not generate as much
income as large corporations do, but they are critical components of and major contributions to the
strength and growth of local communities.

GOVERNMENT CONTRIBUTIONS AND PROGRAMMES IN SUPPORT OF SMEs

Entrepreneurship has to do with identifying gaps and business opportunities in one’s immediate
environment and bringing together the necessary resources in an innovative way to fill those gaps,
bearing the risks involved and in the process gaining personal rewards. Information is a veritable source
of entrepreneurship development, therefore entrepreneurs need to be regularly reminded of the basic
functional areas regarding their enterprises so as to be up to date and be efficient and effective managers.
Following are some agencies, public and private, that have been set up to enhance the performance of
entrepreneurs in Nigeria.
MAN: Manufacturer Association of Nigeria (MAN) was established as a national industrial association
in 1971 to encourage the patronage of Nigerian made products by Nigerians and foreigners; encourage
high standard of quality for member’s products through the collation and the provision of advice and; to
provide avenue for manufacturers to formulate and influence general policy, in regard to industrial
matters.
NASME: National Association of Small and Medium Enterprises (NASME) is a private sector
organisation, with members drawn from small and medium scale enterprises. It is devoted to networking,
capacity building, policy advocacy and promotion of performance of its members firms and operators. It
works to improve the welfare of its members and make input in industrial policy. Analysis and
publications from NAMSE on business environment, competitive enlightenment and policy making are
useful to Nigerian entrepreneurs.

NACCIMA: Nigerian Association of Chambers Of Commerce, Industry, Mines and Agriculture

(NACCIMA) is a voluntary association of manufacturers, merchants, mines, farmers, financiers,
industrialists, trade groups who network together for the principal objectives of promoting, protecting and
improving business environment for micro and macro benefits.

NEPC: Nigerian Export Promotion Council (NEPC) was established in 1976 to minimize the
bureaucratic bottlenecks and increase autonomy in dealing with members of the organized private sector.
Its goal and mission are to make the non-oil export sector a significant contributor to Nigeria’s GDP and
to facilitate opportunities for exporters to promote sustainable economic development.
RMRDC: Raw Materials Research and Development Council (RMRDC) is vested with the mandate to
promote the development and utilisation of Nigeria’s industrial raw materials. It is the nation’s focal point
for the development and utilisation of the nation’s vast industrial raw materials. The council is also meant
to encourage industries to substitute local raw materials for imported ones.
NAPEP: National Poverty Eradication Programme (NAPEP) was established in 2001 by the
federal government aimed at ensuring poverty reduction in the country. It coordinates and oversees
various other institutions, including ministries, and develops plans and guidelines for them to follow with
regards to poverty reduction. The goals of NAPEP include training youths in vocational trades, to
support internship, micro-credit, and create employment in the automobile industry.
SMEDAN: Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) was established
to promote the development of micro, small and medium Enterprises (MSMEs) in the country. Its mission
is to facilitate the access of micro, small and medium entrepreneurs/investors to all resources required for
their development. Its vision is to establish a structured and efficient micro, small and medium enterprises
sector that will enhance sustainable development in Nigeria. SMEDAN’s functions include: Stimulating,
Monitoring and Coordinating the development of the MSMEs sector; Initiating and articulating policy
ideas for micro, small and medium enterprises growth and development; Promoting and facilitating
development programmes, instruments and support services to accelerate the development and
modernisation of MSME operation; Serving as vanguard for rural industrialisation, poverty reduction and
job creation.
CROWD FUNDING: is an effective avenue for entrepreneurs to raise funds for the kick-off of their
business ideas. It is the practice of funding a project or venture by raising money from a large number of
people who each contribute a relatively small amount, typically via the internet. This fund-raising
approach will be befitting of SMEs, such as social enterprises with operations that provide relevant
solutions to existing problems. Small businesses can tap into this fund-raising opportunity and
successfully harness available resources from the general public, usually by appealing to the solution-
proffering nature of the said business.

YES: The Bank of Industry (BOI) has recently launched a youth empowerment program for young and
talented entrepreneurs looking to venture into various sectors of Nigeria’s economy. The Youth
Entrepreneurship Support (YES) Programme is BOI’s effort at addressing the worrisome phenomenon of
youth unemployment in Nigeria by building the capacity of the youths and funding their business ideas.
The YES programme is aimed at equipping young people with the requisite skills and knowledge to be
self-employed by starting and managing their businesses. Also, The Lagos State Employment Trust Fund
(LSETF), was established by The Lagos State Employment Trust Fund Law 2016 to provide financial
support to residents of Lagos State, for job, wealth creation and to tackle unemployment. LSETF serves
as an instrument to inspire the creative and innovative energies of all Lagos residents and reduce
unemployment across the State. The Fund has the mandate to directly invest ₦25Billion in helping Lagos
residents grow and scale their Micro Small and Medium Enterprises (“MSMEs”) or acquire skills to get
better jobs. Additionally, the GroFin Fund is a pioneering development financier specializing in financing
and supporting small and growing businesses (SGBs) across Africa and the Middle East. GroFin
combines patient capital and specialized business support to grow emerging market enterprises.
YOU WIN CONNECT NIGERIA PROGRAM: is a multimedia programme of the Federal Ministry of
Finance. This platform aims to promote entrepreneurship, job creation and wealth via enterprise education
for young Nigerians. Nigerian entrepreneurs will enhance their productivity through relevant SME
development tools. These ventures are promoted by young Nigerians in target sectors that align with the
government’s objective of diversifying the economy and promoting competition and transparency. It is
safe to conclude that as difficult as the Nigerian business environment may seem for SMEs, a few good
opportunities abound for financial relief that may provide succour to their specific challenges. Also, there
exists a number of target specific intervention funds for specialised SME sectors such as agriculture,
technology, etc. Nonetheless, work still needs to be done by the government and stakeholders alike to
ensure the economic sustainability of the Nigerian SME sector across all platforms as they serve not only
as important industries but also as the backbone of the Nigerian economy.

The Central Bank Of Nigeria: The CBN does not lend money directly to SMEs. However, there are
several programs through which the CBN lends money to government-run development financing
institutions. These institutions lend the funds to commercial banks. Through this, SMEs can borrow at
cheap interest rates. The CBN’s 220 billion Naira intervention fund (the “Fund”), for example, allocated
monies to each of Nigeria’s 36 states and the Federal Capital Territory to guarantee that governors have
the resources they need to help SMEs in their areas.
The Central Bank of Nigeria, through several development finance operations, provides a variety of loans
to businesses across the country.

Nigerian Export-Import Bank: The Nigerian Export-Import Bank is tasked with assisting in the export
of goods and services from the country. A NEXIM loan is available to businesses engaged in export-
related operations.

The Bank of Industry: The Bank of Industry’s mission is to provide long-term funding to Nigeria’s
industrial sector. Agriculture, agro-processing, information and communication technology, oil and gas,
solid minerals, and the creative industries are all focus areas.