Strategic planning

These are critical blueprints that facilitate to achieve long term goals of an organization.

It is broad bared plans that facilitates to achieve the purpose of an of an organization

It is organizational management activity used to set priorities, focus energy and resources as
strengthen operation and ensure employees and stakeholders work towards a common goal to
achieve intended resources.

It keeps an accessing and adjusting organization direction in a response to external and internal
environment.

STEPS

The mission

They are steps you follow to achieve the strategic plans.

Steps are activities performed to achieve strategic plans. e.g.

i. developing a manual

ii. putting up mobilizing resources

Vision

The expected end of an organization

The reason why an organization exists

Objectives

These are daily targets that will facilitate you towards the mission and vision.

They must be; specific, measureable, realistic, aeeainable and time bound.

Goals

Are achievements at the end of a given period?

Are cumulative objective covered with a given time.

A goal is bigger picture that achieves our strategic plan.

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Growth strategies

This is how to expand institutions.

It is a road map of diversifying institution using strategic planning items.

It involves doing critical items i.e initiatives/ elements that will move the organization to the
next level.

It focuses on key issues in order to achieve objectives and goals (strategic planning).

Portfolio

These are the key top management decision makers that drive strategic planning.

FACTORS INFLUENCING STRATEGIC PLANNING

A)History

The past more than 7Ps i.e

i. product-which includes items, services, consultancy , work

ii. pricing

iii. placement

iv. promotion i.e. packaging, personal selling, advertising, publicity, public relations

v. physical distribution

vi. Resources. such as human, finance, equipments, machines, tools and land

vii. preferences (citizens ,locals, national)

Also check the interest of the community where strategic planning is national oriented i.e.
national must benefit either in economics, standards of living improved , health or education.

Viii.Back up resources - accessing of resources.

Ix.Production facilities-Resources for working, maintainers, services.

b) External factors.

Look at natural resources, demography , technological environment

c) Internal factors.

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Suppliers, human resource, consumers.

Strategic marketing process

This is the strategic marketing that establishes a clear and focused direction of more than 7Ps

STEPS

i. Objectives- create a lot of revenue, become a market leader.

ii. Mission- clear steps

iii. Analyzing the situation - look at SWOT analysis

iv. Marketing strategy- develop one greater of equal to 7Ps that make you a leader in that
area.

v. Evaluation- appraise the whole system focus on strengths

Growth strategies

Growth means developing and dominating a market sector.

1. Intensive

Penetrate the market by developing a single P and refining it to ensure your positioning in the
market is of more value than others.

2. Extensive

This is where you involve more than one P in the market development to the organization e.g.
product + physical distribution.

3. Selective

Majoring on one P that serves you best

Similar to intensive but focuses on few strategies.

4. Diversification

Production of many different products

Going to other products

5. Franchising

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Having a franchise (product) and franchiser (dealer)

6. Exclusive

Deals with the product of a given company

7. Inclusive

Dealing with product of different companies

8. Electronic systems

Use online platforms.

9. Horizontal strategy

Focusing on a small area that will act as a base to the next level

10. Vertical strategy.

Focus on many areas.

Modes of entering a target market

1. Acquisition

Acquire (buying) an existing organization and then facilitate more than 7Ps.

2. Internal developing

Is developing your organization through more than 7Ps and supply them into the market.

3. Collaboration

Working with stake holders with the same objectives and goals

4. through shares

This is where you buy shares in an organization and resources and motioned to supply more
than 7Ps.

5. Directing investment

This is where you gather resources and begin a venture.

6. Franchising

Relationship between producer and consumer

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MARKETING SEGMENTATION

This is designing and dividing the market through profiting consumers.

General basis of market segmentation

1. Demographic

This is providing according to the characteristics of group of people

They include;

i. Age. infants, adults, teenagers

ii. Lifestyle. introverts or extroverts

iii. Social status. low, medium and high class

iv. Income. low, medium and high

v. Geographical area. Where people live.

vi. Race and Religion.

2. Psychographic

This depends on lifestyle and personal characteristics

 Real self image- actual self concept is how people view themselves and buy products
that match them.

 Ideal self concept- how people would like to view themselves

 Other self concept- buying product to show how others see them.

 Self image-buy according to how they see perceive themselves.

3. Geographical

Products are classified according to nation, streets, states/ locals, countries , neighborhood and
international locations ( beyond national boundaries)

4. Business

Business in wholesalers, retailers, organizations, intermediaries, government market and

private market

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5. Behaviour characteristics

Social i.e. certain product only appease one class.

Social classes can be primary, secondary or tertiary.

Preference group role model, professional cycle

Opinion leaders are trade setters and their words are important and dictate what products are
bound.

Opinion leaders are better informed, sociable, dominated and creative.

6. Culture

Norms, values, standards expected by community.

Benefits of market segmentation

1. Focus on company's objective i.e. survival, penetration.

2. Increases competition position i.e. with government , private, experts, large suppliers

3. Market expansion; locally, county, national, international,. can be vertical/ horizontal

4. Retain customers to gain and maintain current and potential customers.

5. Better communication.

6. Increase profitability by manipulating more than 7ps to more revenue to the

organization

7. Avoids external environment that is non-conducive

Market organization

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 Marketing unit is functionally related with

- Supply
- Warehousing
- Purchasing
- Human resources
- Finance
- Procurement
- Distribution

Product service cycle

Growth

Maturity

Decline

Launching

Services/ products go through cycles/phases from birth to death

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1. It begins at launch where the products are introduced, profits are low and it focuses on
production and research reduction of prices, peoples behaviour and promotion to
penetrate the market
Demand is low because the product is unknown
2. Growth
Demand for product and supply increases
Increase of demand and supply till you reach equilibrium, there is optimum supply
3. Maturity

The market is saturated and cant pick more

Has decline in profits

Variable factors increases, does not yield profit. They are insufficient

Ignore diversification and new opportunities and production ceases to be productive

4. Decline
o Sales drop rapidly
o Price decline
o Profits are low
o Unappealing products
o The enterprise begins to be unproductive i.e. eats up on all profits hence become
unmanageable
o The strategy of breaking this cycle is being innovative in recreating more than
7ps

Market campaigns for financial institutions

1. Door to door campaigns to reach individuals
2. Mobile banking
3. Taking bank services to grass root services
4. Coping strategy i.e. reducing interest rates more than those government sectors
5. Social responsibility e.g. wings to fly
6. Removing minimum balance for account opening
7. Opening retailing outlets horizontally or vertically

8. Outreach campaigns to popularize bank products

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 9. Interviews of CEO to explain the policies of the banks

Consumer behaviour

This is behaviour displayed by buyers in analysis, planning, implementing and controlling

purchasing and using products, services and work economically

Internal factors influencing consumer behaviour

1. Need
2. Motive
3. Perception
4. Learning
5. Belief and altitude
6. Personality

1. Need
This includes
I. Physiological- the basis hierarchy of needs that promotes consumers to buy,
which includes food, shelter and clothing
II. Safety and security needs — are goods bought to guarantee freedom from worry
III. Belongingness and social relationship- are products bought to enhance
acceptance
IV. Self esteem products- products bought on achieving independence and
satisfactory
V. Self actualization-products which displays whom you are

2. Motive
This includes biological and physiological needs

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 I. Biological needs e.g. physiological states e.g. hunger
II. Physiological needs- state of mind tension that makes consumers buy

3. Perception
Are attributes due to incoming stimuli received through common senses?
They influence consumers to buy

4. Learning
Are changes brought about by consumers getting education about a product through
experience, formal and informal learning

5. Belief and attitude

Are thoughts, opinions and knowledge of who we are that drives us to buy products

6. Personality
Are perceptions, self concept of who we are?
They influence consumers choice of products they buy

External factors influencing buying behaviour

1. Social class
2. Reference
3. O[pinion leaders
4. Role theory and cooperate image
5. Culture
6. Family
7. External motivation and drives

1. Social class
This is buying products that indicate what is expected by the society

2. References
Are role models of a society and the product they buy automatically and endoses
them to the market
3. Opinion leaders
Are pace settlers, innovators, initiators, extrovert

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 They set agenda and creatives

4. Role theory and cooperate image

Is the position we hold in society to buy products to match them

5. Culture
Buy products to maintain norms, values and expectations of stake holders

6. Family
Family orientation nuclear and extended influence our buying

7. External motivation and drives

Are influences from without that drives us to buying goods and products e.g.
social media

Buying centers influencing organizational behaviour

1. Initiator
Are those who request for purchases?
2. Users
Those using a product
3. Influencers
They design specification and evaluate alternative
4. Deciders
Have formal and informal authority to approve or select what we buy
5. Approvers
Has power to allow consumption of products
6. Buyers
Those with authority to buy
7. Gatekeepers
Control the flow of information

Contrast between consumer market and business market

Business market Consumer market

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 Few buyers More buyers
Large buyers Small buyers
Are close to suppliers Far from suppliers
Business is non geographical Is geographical
Professional Non-professional
Derived demand Elastic demand
reciprocity Non reciprocity

MARKETING MIX

Definitions

1. Implies 4ps (product, price, promotion, place) which represent sellers view of
marketing technique to influence buyers.
2. It is a term used to describe the co-ordination of the 4 inputs which act as a basic
tool for selling.
3. It is a marketing method called market mix strategy. This is to facilitate
penetrating the market. It is the use of variables.
4. Variables that can be controlled by marketers to encourage consumers to buy.

Importance of marketing mix

1. Facilitate to perform market research and development before making
important decision.
2. It helps in making market segmentation to facilitate maximum sales of
the product.
3. Formulating marketing concept philosophy to be used or adopted by the
firm.
4. Analyze marketing environment surrounding the business.
5. Determine consumer behaviour to facilitate matching 4ps.
6. Establishing product life cycle or product and services to facilitate sales
and diversification.
7. Performing sales forecasting to determine the demand.
8. Designing and managing marketing information system.

Marketing mix elements

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 TARGET MARKET
Product price promotion place
1. Product
 Variety of product offered by a company.
 Quality through product quality concept.
 Design is the dimension involved in making a product.
 Features of the product that includes physical statistics, texture and
workmanship.
 Branding is the act of giving the product a name.
 Sizes are either division or multiplying the product to meet the need of
various customers.
 Services are off sale services that accompany selling of a product, warrant,
guarantee given by organization selling product.
2. Price
 List price of the quotation by the company of the product.
 Discount: these are allowance removed from the list price.
 Allowances: these are commissions earned by sellers and transferred to
customers.
 Payment period: this is the duration offered by sellers for the buyers to clear
their sale.
 Credit terms: these are terms and conditions of selling a product.
 Pricing policies for new and old products.

, 3. Promotion

 Advertising to make it publicly known.

 Publicity: creating awareness through unpaid form of non personal
presentation.
 Public relation: creating good image with the current and potential
customers.
 Sales promotion: promoting activities other than advertising, publicity,
public relation to stimulate interest.
 Packaging: this is designing wrapping materials as a means of personal
selling (involves direct selling between sellers and potential customers. It is
a face to face selling)
 Sales force management: this is managing sales unit to reach the target
market.

, 4. Place

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 Distribution channel to reach the market.
 Coverage of the target market.
 Assortment of diverse products for diverse areas.
 Location i.e. specific areas for delivery of products.
 Inventory: are distribution deports within the market areas.
 Transport system of delivering the products.
 Intermediary organization involved in delivery of the products e.g. Brookside agents.

Factors affecting marketing mix elements

External factors
They are uncontrollable and externally affect an organizations performance.
1. Technology
Emerging of computers with related instruments or machines
 It can destroy an organization.
 It can revolutionize an organization creating new businesses.
 Reverse technology opening new.
 Increases entrepreneurial skills.
 Diversification.
 Induces marketing.
2. Demographic
Human population to be reached
 The size of population to be reached.
 Geographical coverage where people are.
 Population density whether many or sparse.
 Composition.
 Income.
 Lifestyle.
3. Social/cultural forces
 Influences customer behaviour.
 Lifestyle and social values.
 Dynamics of societies influencing to buy.
 Internal culture influencing the 4ps.
 External culture.
 Cultural change influences people to buy.
 Social mobility due to education or talent influencing 4ps.
4. Globalization
 International standard influences 4ps.

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  Laws governing world trade.
 Technology in use.
 Documentation.
 Quality service.
 World culture influences 4ps.
 Supply involvement of the product.
5. Legal environment
 Law governing business.
 Pressure group influencing the law.
 Legalization regulating business.
 Taxation.
 Laws of contract.
7. Economic organization
 Economic cycle moving from boom-stability-recession which represents threats
and opportunities to the organization. Boom offers many opportunities for
marketing, stability presents opportunities and threats.
 Economic factors determining amount and spending of consumers.
 These are purchasing power influenced by savings income credit and discounts.
They facilitate marketing.
 Economic performance indicators influence standard of living quantity, and
quality products consumed. They are GND (gross national product) total value of
goods produced GDP (gross domestic product) total value of products produced
by nationals.
 Economic developing stage. It is either industrialized developed or less
developed. They influence marketing activities.
 Subsistence economy. These are products produced for consumption and affect
marketing activities. They reduce the market because they are not offered for
sale.
 Product/service ownership. This is the level people own facilities for production.
Where owners increase marketing where least or higher they reduce.
 Current stability affected by foreign currency. If the national currency is weak it
lowers if strong it facilitates marketing.
 Trade and functional discounts. Discounts given to trainers.
 Seasonal discounts. Discounts given during special seasons to increase marketing
activities.
8. Natural environment
Are environmental issues involving input?

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  Raw materials such as oil which increase production cost and can affect
marketing activities.
 Energy cost... oil is expensive non renewable and creates challenges of driving
the economy.
 Pollution from industries damaging natural environment necessitating control
which affect marketing activities.
 Disposable chemical and nuclear waste from industries necessitating control
which affects marketing activities.
 Follows factory act, health act which regulate production of products and
controls many players in the market reduce marketing activities.

Internal factors

These are forces close to the organization. They are controllable forces which govern the
organization. They include:

 The firm. It has many departments impacting each other reducing marketing activities.
 Suppliers: are the sources of items to be converted to products and then marketed.
They can either be local national small or big.
 Transport system: are units involved in moving a product. They can either be road
users or railway users air or sea users to move products to the market. They increase
marketing activities.
 Inventories: are organizations involved in releasing products to the market. They are
traditional or modern inventories influencing marketing activities.
 Production: are producers or manufacturers involved in converting raw materials to
products. They affect market activities.
 Packaging: are organizations producing packaging materials that wrap products for
sale. They influence the level of marketing activities.
 Warehousing: are organizations involved in warehousing both traditional and modern
that can affect the rate of marketing activities.
 Physical distributors: are agents, intermediaries, brokers in an organization involved in
moving products within the market. They affect the rate of marketing.

PRODUCT
Meaning of a product and service

Product

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 This is anything meeting the need of a consumer. Can be an idea, good, service, place,
property, organization event, experience or person.
Has attributes or statistics that are touchable and untouchable including color,
dimension, specification, packaging, prestige etc.
New product
1. It is an innovative product that is unique and meets a need. There is no existence
alternative.
2. It is adaptive, replacing existing products like instant coffee.
3. Innovative products that is new from an organization and not new to market.
It has 3 levels:
 Core-benefits being required.
 Tangible or secondary purpose, features, quality, packaging.
 Augment- additional service to core services.

Classification of products

1. Convenience products
Are products a consumer needs but is not willing to spend much time look for them
e.g. a staple product (food).
Are impulse products bought out of emotions?
2. Shopping products
Are worth time and efforts as compared to convenience products e.g. homogenous
shopping products (flour) heterogeneous products (clothes?)
3. Specialty product
Products rarely wanted and people make special efforts to find them (school) it can
be cheap or expensive.
4. Accessories
Are tools, equipments and machines for production?
5. Unsorted product
Products that one does not want yet and do not search for e.g. cars and land.
6. Raw materials
Item for conversion into product e.g. salt, flour.
7. Components
Items for servicing production system e.g. paper, textile.
8. Supplies
Inputs for maintenance, repair and operation

Stages in the adoption process

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 1. Awareness
Is the stage where consumers get to know the launching of a new product
through formal or informal ways and mostly by word of mouth, TV, newspaper,
social media and internet?
2. Interest
This is creating a craving for the product. It drives consumers to search more
3. Evaluation
Is accessing the product individually or by group dynamics
4. Trial
Is testing the product in small way to find out whether it will meet the need of
consumer
5. Adoption
Is the choice to use a product after trial stages
It becomes the product of choice/ interest and potential customers are put to
wait

Production adoption process

1. Innovators

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 Is the 1st consumer to adopt a product

Characteristics
 They legitimize product purchase and can make or destroy the firm
 Personal influence to the market especially by word of mouth
 Must be satisfied to avoid bad mouthing
 Are originators of new ideas

2. Early adopters
Those who give good ideas when they see it
Their opinions are respectful and convenient to others

3. Early majority
Are the few majorities that follow early adopters to adopt the product

4. Middle adopters
Are the majorities and respect others opinions
They are reasonable in analyzing new ideas but maintain status quos

5. Late majority adopters

Often speak against products and may never acknowledge acceptable
They adopt products if the majority support

6. Laggards
Are always against change and are committed to the status quos and the past

PROMOTION MIX

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 This is the short term incentive to encourage the product and service purchase or sale.
They are
 Advertising
 Personal selling
 Point of purchase displays
 Sales promotion
 Public relations
 Packaging
 Demonstrations
 Shows and exhibitions

1. Advertising
It is a bid form of non-personal presentation/ promotion of ideas products services by
identified sponsors
It causes to know & remember or to do something/buying.
Aimed at inducing people to buy
Sometimes is defined as all activities involved in presenting to a group, a non personal
oral or visual openly sponsored message regarding a product, service or idea
It is used to sell/ win acceptance for product, service or idea

Functions of advertising
1. To inform — this is when a new product is introduced. it is aimed at building the
primary demand
2. Educate- is also to create awareness/ knowledge of a product, price or placement of
what is being sold
3. Creates awareness of more than 7ps
4. Persuade- is when competition increases and must build selective demand for sale
of the product
5. Comparison- enhances the company to compare directly or indirectly its brand with
one or more brands of other companies. This facilitate the adjustment of more than
7ps
6. Reminds-the market about the nature of products where the sale begins failing. It
keeps consumers thinking about the product and anytime they intend to buy the
product
They increase the per-capita used on product or service

7. Assist other marketing activities (more than 7ps)

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 8. They also compliment personal selling and sales promotion
9. It makes buying very effective and eyes out of the competitors
10. Entertain. Funny, aesthetic scenes and imagery creates entertainment to the market
and attracts current and potential consumers to the product
It is a strong wave that makes emotional buying other rational
11. Continuous reassurance
Reduces the dissonance from which people may suffer after purchase and from what
they were deceived
It counteracts negative feeling after buying
It increases product/service sales by securing greater consumption attracts new
buyers or introducing new uses of the product. This leads domination of a given
segment of the market

Budgeting methods

This is the way they advocate the money for advertising purpose.

There are varieties of methods applied namely;

i. Availability of funds affordable approach.

ii. Percentage of sales.
iii. Return on investment fund.
iv. Competitive parity.
v. Objective and tasking.

Availability of funds / affordable approach

Its setting the promotion budget at the level the management thinks the company can offer.

The budget is limited to the money available.

Its non-scientific and sometimes based on who is making decision.

Sometimes are referred to as affordable approach when it does not affect the organization.

Percentage sales

The amount appropriated is have as a fixed percent of the sales.

The preceding years figure is either current or estimate of succeeding years.

The total amount is calculated for different products and aggregated as a total sale.

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ADVANTAGES

1. The amount if flexible.

2. Advert cost is related to sale.

3. It is objective

DISADVANTAGES

1.Sales in cause of advert.

2. If sale declines it means the percent for advert should decline.

3. It is inappropriate when new product and services are being introduced to the market.

4. No long term advert programme is developed and maintained.

5. Its non scientific.

Return on investment fund

This is a percent of net profit going for advertisement.

Its based on return after selling the product or service.

If high return is achieved then more money is portioned to the advertisement and the reverse is
true.

Competitive parity

This is where the budget going for advertisement is set to match the competitors.

If the competitors budget is high the organization increases it budget so that it can complete
equally on market.

ADVANTAGE

It assumes competitors are on the right track and no companies have similar objective and
policies.

Objective and tracking method

This is where you develop budget by;

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 a. Defining specific objectives- This is where you use money to meet well defined
objectives.
b. Determining the task that must be performed to achieve this objective — we use money
to satisfy some advertisement activity.
c. Estimate the cost of performance this task and supplying the money to meet it.

2. Public relations
Is where communication is addressed to wider audience than just customer and
market?
It affects sales by giving general support to image of supplies or they form community
and relationship with its various public.
It is also called societal market concept which has welfare of:
a. Company interest
The company can only sell on profit so that it grows and expands.
b. Consumer interest
You only sell that which adds value to the consumers such as a product that
promotes health e.g. brown bread is healthier than white
c. Public welfare
You sell product that are safe, healthy and welfare to the public.
The product must be friendly to the consumer where they cannot harm.
d. Environmental friendly products.
The company sells products that are not harmful at a long run to the environment.
The products after use should break down to harmless compounds that are
degradable
e. Reduce market efforts.
Products design and formulation, reduce price facilitates, reduce promotion and
placement to make the product affordable to consumers

Functions of public relations

1. Creates and maintain the variable relation with various stakeholders i.e. seek and
establish coordinate relationship.
2. Building good relation with stakeholders to obtain favorable publicity.
3. Build up good cooperate image to stimulate good standing for the firm in the society to
uplift face value of the organization to enjoy good will from its stakeholders
4. Handling unfavorable rumors, stories and events it counteracts negative advertisement
information about the organization.
5. It creates favorable image promoting the organization i.e. its products and staffs.

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6. Welfare staff i.e. promoting staff welfare where good working condition and staff
development is done this motivates staff to work and market the product.

3. Personal selling

This is where the company uses people to promote itself and it products.

It is interpersonal aim of the promotion mix.

Its a two way personal communication between sales people and individual customers
whether through face to face, telephone, written message, email, direct mail etc.

FUNCTIONS

1. Acts as a contact to customers i.e. potential customers.

2. Serves as a critical link between a company and its customers.

3. Finds and develops new customers i.e. helping to penetrate the market faster.

4.Negotiates prices terns and closes sales their specialist in pricing strategies and laying
down terms of sale i.e. transportation cost.

5. Common information about the companys product and services.

6. Sells product to the customers as they interact with customers.

7. They provide services to customers such as market research and intelligence.

Reasons why organizations prefer personal selling

1. Its more effective then advertising in complex selling because it can probe customers
to learn about products.
2. They can adjust the marketing offer to fit the special needs of each customer and
can negotiate terms of sale.
3. Can build long term personal relationship with key decision makers.
4. Interact with customers and potential customers.
5. Answering questions which are disturbing to customers this facilitate to open the
market.
6. Helps to overcome objective because of interactions of products price.
7. Helps to supply needed information faster than other promotion methods.
8. Helps to develop message to match unique characteristics.

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Publicity

This is public relationship related to promoting companys products and services.

Creates awareness of products and services to prospective consumers

Also builds loyalty to current consumers and reduce any dishonor attitude

FUNCTIONS

1. Make the company aware of products

2. Maintain positive visibility with the public.
3. Promote the image of the company which attracts more consumers.
4. Overcoming negative image that would lead to losing the consumers
5. Winning new market e.g. international market
6. Holding a segment and keeping there would be competitors away.

Sales promotion

Are marketing activities other than personal selling, advertising and publicity that stimulate
consumer purchasing and dealer effectiveness.

The range of activities and product feature giving that push in achieving the sale.

FUNCTIONS

1. Accelerate tools designed to quicken sale.

2. Use as a replacement to sales men.
3. It is the only promotional materials available at the point of purchase.
4. Facilitate self service automatic vending where salesmen are not available.
5. Alleviates consumer dissatisfaction.

Packaging

Implies the process of designing the wrapping materials of a product especially when dealing
with continuous production for storage and transport

It adds value and regarded as the final stage.

FUNCTIONS

1. Protection from physical damages, microbial and from pilferage

2. It silences sales person
3. Facilitates distribution and transportation.

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 4. Legal requirement for product and services before being sold.
5. Innovative and creative
6. To enhance competitive edge
7. Appealing packaging stimulates buying (impulse buying)
8. Creates unitization therefore economy of transportation.
9. Facilitates material handling by tools machine and equipment.
10. Enhance warehousing logistics such as receiving and issuing.
PRICE
1. Definition
2. Importance
3. Objectives
4. Methods
5. Factors

Definition

Price is value expressed in terms of dollars, cent or whatever monetary medium a country uses
exchange.

Is the exchange value for items in terms of money?

Is the price tag of an item or value attached to an item?

Importance

1. Facilitates more 7Ps i.e. product design, specification, placement, promotion, product
life cycle, philosophy of market, people behaviour, market segmentation.

Objectives

1. To make profit:
i. To maximize profit
ii. To achieve good returns
iii. Achieve predetermined return
iv. Achieve satisfaction profit
2. To achieve sales in order to;
 Penetrate the market
 Maintain market share
 Increase market share
3. Competition
 Prevent competition

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  Achieve non-price competition policy
 Meeting competition of other organizations
4. Price stability to avoid fluctuation of prices
5. Capturing the market when introducing a product/ service
6. Achieve a target return on investment
7. Guarantee ability to pay consumers especially in services
Improve share of market

Methods
1. Cost plus pricing or markup pricing
Setting of price by totaling expenditure and add a profit margin of given percentage
This is done by supply chain elements because all of them are involved in marketing
a product

Advantages
i. Easy to apply
ii. Less uncertainties of cost
iii. Simplifies the pricing task
iv. When all players in the industry use this approach, the prices are similar and
reduce price wars

Disadvantages

i. Whether the consumer will pay is questionable

ii. Demand and supply ignored which is a reality
iii. Competition is ignored
iv. Techniques used is based on cost concept which may not work

2. Competition oriented pricing

- Setting prices on the basis of competitors price
- Not maintaining a rigid pricing system
- adjusting prices according to competitors prices
- Keeping prices at approximately level charged by the industry i.e. going rate

Reasons
i. Costs are difficult to measure
ii. Practiced in homogenous product
iii. Least disruptive to industry harmony

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 iv. Applied in competitive market
v. Difficult to know how buyers and competitors will react to price differentials

Demand oriented

- Price set depending on demand and supply of a product

- When supply goes up, demand goes down and therefore the prices lowers and vice
versa
- Looks at demand condition rather than the cost
- Price discrimination according to demand and supply
- Sellers estimate how much value buyers see in the market offer and price
accordingly

Factors influencing pricing

External factors

1. Demographic
2. Economy
3. Technology
4. Natural environment
5. Legal environment
6. Geographical environment
7. Ecological

Internal factors

1. Suppliers
2. Procurement
3. Purchasing
4. Transport
5. Inventory
6. Production
7. Packaging
8. Warehousing
9. Distribution

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NEW PRODUCT DEVELOPMENT

- Definition
- New product
- Process of new product development
- Factors necessitating new product development

Def-refers to the need satisfying offering of a firm to customers

It implies buying satisfying items and not parts

It is a complex of tangible and intangible attributes including packaging , color, price, prestige
and offer sale services which the buyer accept as satisfying needs/wants

New product

It is innovative truly unique product for which there is a real need but for which there is no
existing substitute generally considered satisfactory

It may also refer to adaptive replacement of existing product involving a significance

differentiation in the existing articles

They are new products to a company and not to the market

Process of new product development

New product development strategies

1. Acquisition of buying a whole company license to produce someone elses product

2. Development of the product.

The organization develops original product and services

3. Product modification
4. Branding through research and development

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Stages

1. Idea formulation
2. Idea screening
3. Product and concept development and testing
4. Testing market
5. Business analysis
6. commercialization

1. idea formulation
Is a pool of new product ideas in the hope that one of them will be developed into a
successful product/service?
Sources:
 customers- in direct customer service
 focused group discussion by professional views through media
 suggestions system where letters received from customers complaints
performance on existing product and suggesting improving current
products
 company laboratories through testing
 observing and analyzing new product introduced by competitors to get
clues about their new product
 distributors and suppliers since they are in contact with consumers
 sales men through listening and watching
 conducting survey to know consumer needs and wants
 analyzing customer questions and complaints

2. idea screening
- determining good ideas and drop poor ones
- involves idea evaluation and pruning process avoiding throwing the good news
- it is time consuming and requires to be objective
- should be logical in idea elimination process

Factors considered

a) resources
b) company objective
c) product life cycle

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d) growth potential
e) product visibility
f) product safety
g) consumer welfare
h) ethical issues

3. Product development and testing

- The idea on paper is developed and converted to a physical product
- Organizations try to concretize the product i.e. to make it real /tangible
- Finds out if the product is technically feasible
- It is then branded and packaging challenges resolved
- Makes a prototype i.e. sample
- Choose a good name to ensure mentioning its benefit, easy to pronounce,
recognize, suggest quality and differentiate from competitive markets

4. Concept testing
Is getting comments from customers about how well a new product idea fits their
needs
Use market research such as informal focus groups to get the reactions of customer
via:
 Test marketing
This is where the product and marketing programmes is tested in realistic
marketing setting
It gives the marketer experience with marketing the product before going to
the greater expenses of full production
 Standard test marketing
This is using test marketing to test whether the product will succeed or not. It
is tried in representative test cities before conducting a full market campaign
 Controlled test market
This is where research firms keep information on performed research of new
product at a fee, they are called market consultants
 Stimulated test markets

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 Is where an organization test new product in a simulated computer monitors
This is where you compare how the selling piece impact each other

5. Business analysis
Idea is expanded into concrete business proposal in which management
 Identifies product features
 Estimate product demand and profitability
 Establishes a programme to develop the product
 Assigns responsibility for further research and development
 Project the future sales
 Forecasting and predicting sales and cost of new product

6. Commercialization
After a product is market tested, produces and launched the organization designs
a) The time to launch the product and is done when sales demand is optimum
b) The location i.e. decide whether single or several localities or international
launching

There are 4 alternatives to commercialize the product i.e.

 Product trial rate

 Sales are low
 Repurchases rates are low
 -drop the product because it will incur unreasonable cost

 Trial rate low

 Repurchases rates is reasonable
 The product therefore increases promotion

 Trial rate is high

 Repurchase rate is low
 Improves the product features
 Trial purchase rate is high
 Commercialize the product

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Factors necessitating new product development

1. It helps meet the pressure of competition

2. Utilizes excess production and marketing capacity after an expansion programme
3. Company growth is only sustained through development of new product
4. Sometimes new customers can only be satisfied by new product
5. Human needs, both physiological and mycological keep on changing over time due to
external and internal influences

DISTRIBUTION SYSTEM FOR FINANCIAL SERVICES

Def- distribution implies packaging utilization- product inventory- depots- ultimate
consumer (users)
It is the flow of goods and products and information from organizational warehouses
or supplier to the final distribution or end consumer user
Also defined as the route taken by a product as it moves from producers to the
ultimate consumer

Functions of distribution
1. Contracting — reaching out to consumers and offering their needs/wants
2. Gather and distribute marketing research and intelligence information about
facts and market forces needed for planning and aid in exchange
3. Developing and spreading persuasive communication about the offer
4. Assuming the risk of carrying out the channel work
5. Matching- they match given packages with consumer needs
6. Negotiation —reaching an agreement on prices, terms and conditions
7. Sourcing-bulk breaking and bulk building

Types of distribution in banking centre

1. Tele-banking
Is money electronic transferors e.g. via phones
2. Internet banking
Is distributing money from one bank to another
3. Mobile banking
Is a unit within banks that moves to the field where consumers either withdraw
or bank their money
4. Branch network

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 Is a system of locating many units of a bank at CBD to facilitate withdrawal and
depositing of business
5. ATM is either automatically depositing or withdrawing money via machine
system
6. Agents are strategically authorized agents dealing with transactions of money
Are usually called appointed dealers
7. Corporate are limited companies constituted for a specific purpose e.g. a
corporate designed to deal with a money
8. Retailing is giving of money to ultimate consumer who trade with it and pays
back the principal with interest

Factors influencing choice of distribution system

1. External factors
a) Economic environment
 Discount
 Price
 Interest
 Foreign exchange
 Economic factors
 Living standards
b) Demographic environment
 Age
 Population
 Density/spouse
 Gender
c) Technological environment
 Innovation
 Adaptability
 Modification
 Reversed technology
d) Legal environment
 Companies act
 Amendments
 Factory act
 Building by-laws
e) Political environment
 Government systems

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 f) Geographical environment
 National, international, local
g) Natural environment
 Inputs i.e. fertilizers
2. Internal factors
Supply management elements

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