An Overview of Marketing

1.0 Introduction to Marketing

The goal of every organization is to create value for customers and in turn capture value from
them. Companies aim at building profitable relationships with customers. Companies must
develop and offer products and services that will be of value to the customers and must
convince them that they are gaining more from the products and services they are buying
than what they have foregone in terms of cash or other alternatives. There is therefore need
to understand consumer needs and wants, deciding which target market an organisation can
serve best, and developing a value proposition by which an organisation can attract and
retain target consumers.

Marketing Defined

In order to explain how the marketing of goods and services is done, we must first describe
what marketing is. There are several definitions of Marketing, but we present two definitions
of Marketing as defined by the Chartered Institute of Marketing (CIM) and the American
Marketing Association (AMA).

“The management process of anticipating, identifying and satisfying customer requirements

profitably” (CIM, 2001).

“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” (AMA, 2007)

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Simple Marketing Exchange Process

2.0 The Marketing Process and Functions of Marketing

There are four important aspects that constitute the marketing process and these include;

 Determine – Marketing should begin with potential customer needs in mind rather
than with production. This entails determining or finding out the needs and wants of
society. Marketing practitioners can achieve this by undertaking marketing research.
 Design: Designing entails coming up with the types of offerings that will be needed
to satisfy those needs or wants that have been identified in the determination stage.
Design decisions might include decisions on the product design and packaging design.
 Develop: This entails developing the offering in to a finished product that can be
offered for sale. It is important that the product that is developed is non-defective as
the costs associated with defective products can be immense e.g product re-calls or
bad word of mouth from dissatisfied customers.
 Deliver: This entails making the product available to the market and marketers need
to ensure that they get the product in the right channels.

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2.1 Functions of Marketing
There are eight functions of marketing as indicated in the figure below. Each of these
functions of marketing is interlinked with stakeholder requirements. Marketers at different
levels within the organisation will undertake different components of these functions at
different levels. In general terms, the senior marketer or marketing director will direct these
functions, while the marketing manager will manage them, the marketing executive will
undertake the actions necessary to fulfil these functions and the marketing assistant will
support the marketing executive. Below is a presentation of the eight functions of marketers.

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Functional Map For Marketing

1. Provide marketing intelligence and customer insight – Marketing intelligence is

about collecting information about the day to day happenings in the market such as
competitor prices, competitor activities e.t.c. The intelligence gathered can be used
by marketers for decision making. Customer insight on the other hand is about
collecting information on consumers’ buyer behaviour and interpretation of trends
in human behaviour in order to improve product development, marketing
communications development and customer support.
2. Provide strategic marketing direction for the organisation – The organisation
must be able to plan for the long term and avoid suffering from marketing myopia
(short-sightedness) because the business environment is both dynamic and
uncertain.

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3. Develop the customer proposition – It is the functional of marketing to understand
the total benefits that customers seek from a product and develop the customer
proposition to deliver those benefits.
4. Manage and provide marketing communications – This function of marketing
entails engaging with the target market to create awareness about the organisation
or its products as well as trying to influence the target market to choose an
organisation’s products using different marketing communications tools. In addition,
marketing communications should be managed by ensuring the right message is
communicated to the right people and the right channels are used to communicate.
5. Use and develop marketing and customer information – This function of marketing
entails gathering information about the markets and customers that can be used in
decision making as well as in the company’s marketing strategy. For example, an
understanding of market and sales potential can help dictate the allocation of
resources. Further, information on customers can help in understanding customers
and devising of strategies to serve them better.
6. Lead marketing operations and programmes – It is the function of marketing to
take a lead in the implementation of marketing operations and programmes such as
market activations, sales promotions and market development.
7. Work with other business functions and third parties – In order to serve the
customers effectively, it is cardinal for the marketing function to work with other
departments such as finance, human resource and the supply chain departments.
Interfunctional co-ordination should be at the heart of marketing because if
marketing works in isolation, it will be impossible to serve the customers
satisfactorily. Apart from working with other business functions, marketing works
with third parties like advertising agencies, marketing activation agencies, media
houses and distributors to implement marketing programmes.
8. Manage and develop teams and individuals – Serving customers is done through
teams and individuals and it is the function of marketing to ensure that these teams
and individuals are managed in order to deliver. Further, the inculcation of the right
values (e.g. teamwork, empathy, responsiveness) and skills (customer care skills,
selling skills e.t.c) are paramount for both teams and individuals.
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3.0 Introduction to the Marketing Mix Elements
The marketing mix is a mix of marketing policies and procedures to produce a profitable
enterprise and is commonly known as the 4Ps. The marketing mix elements which a
manufacturer must consider in developing policies and procedures include;

 Product – Represents the offering and how it meets the customer’s need, it’s
packaging and labelling. Product comprises both goods and services.

 Place (distribution) – Represents distribution and concerns how to place the

optimum amount of goods and services before the maximum number of a target
market at the times and locations they want

 Price – Represents the cost to the customer, and cost plus profit to the seller. Price is
the only element in the marketing mix that generates revenue as the other element
represent cost.

 Promotion – Represents how the product’s benefits and features are conveyed to the
potential buyer. Examples of promotional tools include advertising, personal selling,
direct marketing, sales promotions and public relations.

3.1 Extension from 4 to 7Ps

The traditional 4Ps marketing mix was developed at a time when goods marketing was more
prevalent and the role of services was insignificant. The growing importance of services
necessitated the revising of the 4Ps as it posed some limitations when it came to marketing
of services. For example, the intangibility aspect of services is normally ignored and
promotion fails to accommodate the inseparability issue between production and
consumption of services.

The shortcomings mentioned above led to the extension of the tradition marketing mix to an
extended marketing mix which comprises 7Ps. The additional 3Ps have been included to
address the unique characteristics of services and these include people, physical evidence
and processes. A detailed explanation of the services marketing mix follows below;

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  Physical evidence – to emphasise that the tangible components of services were
strategically important since customers used these to infer what the quality of society
might be (i.e. Airline loyalty cards, in-flight magazine, entertainment service).

 Process – because service delivery is inseparable from the customer consumption

process, we include process because of the need to manage customer expectations
and satisfaction which becomes strategically important in this context. Where
processes are standardised, it is easier to manage customer expectations (i.e. self
service, online check in, travel class, increasing availability of alternative locations).

 People – included to emphasise that services are delivered by customer service

personnel, sometimes experts and often professionals who interact with the
customer sometimes in an intimate manner (i.e. check-in staff, customer service desk,
cabin crew/pilot team).

3.2 The Nature of the Service Product

Services are said to have four key characteristics which impact on marketing programmes.
These are: Intangibility, Inseparability, Heterogeneity /Variability and Perishability. It is
helpful to consider each of these characteristics and their implications briefly:

a) Intangibility

Services are said to be intangible - they cannot be seen or tasted, for example. This can cause
lack of confidence on the part of the consumer. As was apparent earlier, in considering
pricing and services marketing, it is often difficult for the consumer to measure service value
and quality. To overcome this, consumers tend to look for evidence of quality and
other attributes, for example in the decor and surroundings of the beauty salon, or from the
qualifications and professional standing of the consultant.

Implications of Intangibility:

 Services Cannot be inventoried

 Services Present difficulties in managing demand

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  Services cannot be patented easily

 Services are copied by competitors easily

 Cannot be readily displayed or easily communicated

 difficulty for customers to assess quality

 Advertising and Pricing is difficult

b) Inseparability

Services are produced and consumed at the same time, unlike goods which may be
manufactured, then stored for later distribution. This means that the service provider
becomes an integral part of the service itself. The waitress in the restaurant, or the cashier
in the bank, is an inseparable part of the service offering. The client also participates to some
extent in the service, and can affect the outcome of the service. People can be part of the
service itself, and this can be an advantage for services marketers.

Implications of Inseparability

 Mass production is difficult.

 Real-time offering. Though this may be risky but it also provides opportunities for
customization.

 Customers affect the outcome based on how they communicate about what they want.

 Employees affect the service outcome based on their knowledge and training e.t.c.

c) Heterogeneity / Variability

Because a service is produced and consumed simultaneously, and because individual people
make up part of the service offering, it can be argued that a service is always unique; it only
exists once, and is never exactly repeated. This can give rise to concern about service quality
and uniformity issues. Personnel training and careful monitoring of customer satisfaction
and feedback can help to maintain high standards.

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Implications of heterogeneity:

 Services cannot be easily monitored because the quality depends on customers,

employees, other customers and demand.
 Problems with consistency as it involves emotional labour
 There is no sure knowledge that the service delivered matches what was planned and
promoted.

d) Perishability

Services are perishable; they cannot be stored. Therefore, an empty seat on a plane,
for example, is a lost opportunity forever. Restaurants are now charging for reservations
which are not kept, charges may be made for missed appointments at the dental clinic.
Perishability does not pose too much of a problem when demand for a service is steady, but
in times of unusually high or low demand service organizations can have severe difficulties.

Implications

 Inability to store the service for future use. It becomes difficult to forecast demand or
creatively plan for capacity.

 It is difficult to synchronize supply and demand with services

 Services cannot be returned or resold and there is therefore need for strong recovery
strategies in the event of service failure.

In conclusion, it is important to mention that the marketing of services must be different

from the way physical goods are marketed because of the nature of the service product.
Marketers of services must be able to overcome the implications that arise as a result of the
unique characteristics that services possess such as intangibility, variability, perishability
and inseparability especially in this era where services as products have taken prominence.

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4.0 Marketing Management Philosophies
There are five (5) competing philosophies that strongly influence an organisation’s
marketing processes and these are; production philosophy, product philosophy, sales
philosophy, marketing philosophy and societal marketing philosophy.

4.1. Production Philosophy

The production concept or philosophy, is one of the oldest in business and it holds that
consumers prefer products that are widely available and inexpensive. This philosophy is
characterised by:

 Managers of production-oriented businesses concentrate on achieving high

production efficiency and low costs in order to make the product affordable.
 Intensive mass distribution of the product to ensure that the product is made
available and easily accessible.
This philosophy makes sense in developing countries, where consumers are more interested
in obtaining the product than in its features. It is also used when a company wants to expand
the market.

The weakness of the production orientation philosophy is that it does not take into
consideration the needs and wants of the market place when designing goods and services.
It uses an inside-outside perspective as it starts from the factory first before going to the
market.

4.2. The Product Concept or Philosophy

The Product concept or philosophy, holds that consumers favour those products that offer
the most quality, performance, or innovative features. Managers in these organizations focus
on making superior products and improving them over time, assuming that buyers can
appraise quality and performance.

Product-oriented companies often design their products with little or no customer input,
trusting that their engineers can design exceptional products.

The weakness of the production orientation philosophy is that it does not take into
consideration the needs and wants of the market place when designing goods and services.

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The product concept can lead to marketing myopia or short sightedness which has killed
postal services in Zambia.

4.3. Selling Concept or Sales Orientation Philosophy

A sales orientation is based on the ideas that people will buy more goods and services if
aggressive sales techniques are used and that high sales result in high profits. To sales
oriented firms, marketing means selling things and collecting money and they encourage
intermediaries to push manufacturer’s products more aggressively. This concept assumes
that consumers must be coaxed into buying, so the company has a battery of selling and
promotion tools to stimulate buying.

The selling concept is practiced most aggressively with unsought goods—goods that buyers
normally do not think of buying, such as insurance and funeral plots. The selling concept is
also practiced in the non-profit area by fund-raisers, college admissions offices, and political
parties.

The weakness of this philosophy is that there is a lack of understanding of the needs and
wants of the marketplace. Sales oriented companies often find that despite the quality of
their sale force, they cannot convince buyers to buy goods or services that are neither wanted
nor needed.

4.4. The Marketing Concept or Market Orientation Philosophy

The marketing concept holds that the key to achieving organizational goals consists of the
company being more effective than its competitors in creating, delivering, and
communicating customer value to its chosen target markets.

Companies that pursue the marketing concept are said to be marketing oriented. Market
Orientation refers to ‘the organisationwide generation of market intelligence pertaining to
current and future customer needs, disseminate of the intelligence across the departments,
and organisationwide responsiveness to it’ (Kohli and Jaworski, 1990).

The market orientation is guided by the marketing concept which states that the social and
economic justification for an organisation’s existence is the satisfaction of customer wants
and needs while meeting the organisational objectives. The marketing concept holds that

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what a business thinks it produces is not of primary importance but rather what customers
think they are buying and the perceived value they will get. The marketing orientation
includes;

• Focusing on customer wants and needs so that the organisation can distinguish its
products from competitors.

• Integrating all the organisations activities including production to satisfy these wants.

• Achieving long term goals for the organisation by satisfying customer wants and
needs legally and responsibly.

Achieving a market orientation therefore calls for an organisation to obtain information

about customers, competitors and markets, examining the information from a total business
perspective, determining how to deliver superior customer value and implementing actions
to provide value to customers. Narver and Slater (1994) suggested that developing a market
orientation means developing:

a) Customer orientation - with creating superior value by continuously developing and

redeveloping product and service offerings to meet customer needs. To do this, we
measure customer satisfaction on a continuous basis and train and develop front-line
service staff accordingly.

b) Competitor orientation - Requires an organisation to develop an understanding of its

competitors short-term strengths and weaknesses and it’s long term capabilities and
strategies.

c) Inter-functional coordination or Integrated Marketing - Requires all the functions of

an organisation to work together to achieve the above foci for long term profitability.

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 The Three (3) Components of Market Orientation

In order to achieve market orientation so that an organisation is internally responsive to

changes in the market place, the following factors must be borne in mind;

 Senior management support

 Development of teams to gather the necessary market intelligence data
 Market sensing through environmental scanning
4.5. The societal Marketing Concept
The societal marketing orientation extends the marketing concept by acknowledging that
some products that customers want may not really be in their interests or the best interest
of society as a whole. This philosophy states that an organisation exists not only to satisfy
customer wants and needs and to meet organisational objectives but also to preserve or
enhance individual’s and society’s long term interests. This concept tries to address society’s
concerns such as climate change, the depleting ozone layer, fuel shortages, pollution and
health concerns. Addressing these concerns will ensure that resources are conserved and
reduce the damage to the environment.

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5.0 Marketing in Context
It must be understood that there are different marketing techniques and tools that will be
employed in organisations depending on the specific sector being looked at or the marketing
context. For example, whether it is industrial (e.g business to business), consumer (e.g retail)
or services based (e.g education, car hire or professional services like accountancy), or used
in the not-for profit context. The three unique contexts of marketing include; consumer
goods, industrial (business to business), and services. A brief discussion on how each of these
contexts affects how marketing is undertaken follows below.

5.1. The Consumer Goods Perspective

Consumer goods can be classified in three ways. The first classification is that of
convenience goods which looks at those goods that are purchased frequently and with
minimal effort such as sugar and bread. The second classification is that of shopping goods
and this classification refers to those goods that are purchased in a selective manner based
on suitability, quality, price and style such as furniture and electrical appliances. The last
classification is that of speciality goods and this class represents those goods that are highly
selected because only that product is capable of meeting a specific need (speciality goods are
bought infrequently, are very expensive and represent high risk e.g sports car, Rolex
watches).

The main focus in the consumer goods perspective is around the ideas of the marketing mix.
Marketers will therefore focus their energies in trying to manipulate the 4Ps based on the
product that they are offering. Among the key issues to focus on is the facilitation of rapid
exchange of goods, efficiency in managing the distribution of the product through the supply
chain and the effectiveness of matching demand and supply.

5.2. The Consumer Services Perspective

This perspective is organised around the idea that markets are increasingly characterised
not by physical goods but by intangible services. Services marketing thinkers suggest that
the intangible, performance-dependant, nature of services substantially affect the way
services should be marketed. Among some of the key issues that call for a different strategy
to market services include;

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  Services cannot be protected by patent.
 Services do not use packaging
 Services lack physical display
A detailed look the characteristics of services will be done later. These include
intangibility, perishability, variability and inseparability.

Another aspect in the marketing of services is that marketers do not just have the 4Ps to
manipulate but rather have to deal with an extended services marketing mix that also
includes process, people and physical evidence.

5.3 The Business to Business Perspective

Business- to- Business (B2B) marketing is a subject that has not been adequately covered by
most marketing textbooks as a result of over-emphasis on consumer goods marketing.
Business- to- Business marketing is essentially different from consumer marketing because
the customer is a business rather than an individual household, or chief shopper. B2B
requires that marketers deal with more sophisticated customers who may buy in volume, as
part of a decision making unit (with other buyers and technicians), who are trained to
buy/procure professionally, and who are rewarded for buying the right products at the right
price.

The emphasis in B2B markets is strongly focused on the development and building of
mutually beneficial relationships based on commitment and trust.

Business to Business markets can create a competitive advantage by developing a strong

linkage between the marketing and logistics function, and developing a strong customer
service proposition through;

 Cycle time order reduction

 Accurate invoice procedures
 Reliable delivery
 Effective claims procedures
 Inventory availability
 Effective/planned salesperson visits

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  Convenient ordering systems
 Flexible delivery times
 Strong aftersales support
Having looked at the three different contexts in marketing above, it is cardinal that
marketers adopt the correct marketing tools and techniques to use based on the
marketing context or perspective.

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6 Building Customer Value, Satisfaction and Retention
Customer Value

Customer value is the relationship between benefits and the sacrifice necessary to obtain
those benefits. Customer value is not simply a matter of high quality. A high quality product
that is available only at a high price will not be perceived as a good value, nor will low quality
product selling for a low price. Instead, customers value goods and services that are of the
quality they expect and that are sold at prices they are willing to pay. A Mercedes Benz and
an Iphone fetch for premium prices because consumers feel they get value in these products.
On the other hand, lower income consumers are price sensitive but they will only pay for a
product if the product delivers a benefit that is worth the money. What sense is in buying a
product that is cheaper but cannot do the job?

Marketers interested in customer value can do the following;

 Offer products that perform – This is the bare minimum requirement and
companies should listen to customers in order to determine the performance
characteristics that are most important to them.
 Earn trust – Earning trust can be achieved by delivering value consistently and this
leads to a loyal customer base which enhances the firm’s ability to grow.
 Avoid unrealistic pricing – Consumers expect the pricing to be realistic based on the
benefits that they will get from the product. Unrealistic prices will chase customers
away.
 Give the buyer facts – Companies must endeavour to give their customers facts
through their sales people so that they can make informed decisions. Sales people
must therefore find out what customers need and work towards finding a solution.
 Offer organisation-wide commitment in service and after sales-support –
Customer service should be at the centre of an organisation in order to keep up with
customer expectations.

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  Co-creation – Some companies and products allow customers to help create their
own experience.
Customer Satisfaction

Customer satisfaction is the customer’s evaluation of a good or service in terms of whether

that good or service has met the customer’s needs and expectations. Failure to meet the
needs and expectations of customers result in dissatisfaction with the good or service.
Organisations must therefore develop a culture of delighting customers. The tools below can
help in tracking and measuring customer satisfaction;

1. Complaint Suggestion Systems – A customer centred organisation makes it easy for

its customers to deliver suggestions and complaints. This could be done by providing
forms which will include the likes and dislikes or establish hotlines that are toll free.
2. Customer Satisfaction Surveys – Customer satisfaction must be measured by
conducting periodic surveys as dissatisfied customers do not always come forward to
complain even when complaint suggestion systems are in place.
3. Ghost Shopping – Companies can hire persons to pose as potential buyers to report
on strong and weak points in buying company and competitor products.
4. Lost Customer Analysis – Companies should contact customers who have stopped
buying or who have switched to another supplier in order to learn what happened.
Customer satisfaction is key to customer retention because customer satisfaction leads to
the following;

 Customer loyalty
 A satisfied customer buys more as the company introduces new products and
upgrades existing products.
 A satisfied customer talks favourably about the company and its products
 A satisfied customer pays less attention to competing brands and advertising and is
less sensitive to price.
 A satisfied customer offers product ideas to the company.
 A satisfied customer costs less to serve than new customers because transactions are
routinized.

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Building Customer Retention
Attracting new customers to a business is only the beginning but what matters most is
retaining those customers. The best companies view new customer attraction as the
launching point for developing and enhancing a long term relationship. Companies can
expand their market share in three ways; attracting new customers, increasing business with
existing customers and retaining current customers. It must be said though that it is cheaper
to do business with existing customers than to attract new customers and building long term
relationships becomes cardinal. Long-term relationships can be built using relationship
marketing which is a strategy that focuses on keeping and improving relationships with
current customers.

There are two ways in which customer retention can be achieved and these are outlined
below;

1. Erect High Switching Barriers – Under this method, customers are less likely to
switch to other brands or suppliers because this would involve high switching costs
such as high capital costs, high search costs or the loss of loyal-customer discounts.
2. Deliver High Customer Satisfaction through Relationship Marketing –
Relationship marketing involves all the steps companies undertake to know and
serve their valued customers better.
While erecting barriers might work for a limited period of time, the best strategies for
retention are relationship marketing strategies. Below are the fundamental principles that
relationship marketing strategies are built on;

 Customer Oriented Personnel – This calls for employees to be customer oriented

in terms of their attitudes and actions. Employees represent their firms in the eyes
of their customer and any negative or positive action will be a reflection of their firm.
 Employee Training - Leading marketers recognise the role of employee training in
customer service and relationship building. Knowledgeable employees are not only
an asset to an organisation but also to its customers.
 Empowerment – Empowerment is about giving employees more authority to solve
customer problems on the spot. Employees develop ownership attitudes and feel like

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 part-owners. Empowered employees manage themselves, are more likely to work
hard, account for their own performance and take prudent risks to build a stronger
business and sustain the company’s success.
 Teamwork – Teamwork entails collaborative efforts of people to accomplish
common objectives. Teamwork is fundamental in driving high levels of customer
satisfaction and superior customer value. Teamwork must therefore be emphasised
in intra and inter departmental circles as a way of encouraging cooperation rather
than competition.

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7.0 The Marketing Environment
A marketing oriented firm looks outward to the environment in which it operates by adapting to take
advantage of emerging opportunities and to minimise potential threats. The Marketing environment
consists of forces and actors that affect a company’s capabilities to operate effectively in delivering
goods and services to its customers a discussion of the different forces and actors that affect
companies follows below;

Macroenvironmnt
Political
Economical
Social Cultural
Technological

Microenvironment Ecological
Suppliers,
Legal Customers,
Distributors,
Competitors,
Publics

Company

The Microenvironment

The microenvironment consists of the actors in the firm’s immediate environment that affect it
capabilities to operate effectively in its target markets. The actors in the micro-environment are
discussed below;

The microenvironment consists of six forces close to the company that affect its ability to serve its
customers:

a. The company itself (including departments).

b. Suppliers.

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c. Distributors (intermediaries).

d. Customer markets.

e. Competitors.

f. Publics.

a. The Company

A company’s internal environment - its several departments, management levels, objectives, policies
and strategies - may affect marketing management's decision making and marketing strategies. Top
management is responsible for setting the company’s mission, objectives, broad strategies, and
policies and Maketing Managers must make decisions within the parameters established by top
management.

Marketing managers must also work closely with other company departments such as finance, R and
D, purchasing, manufacturing, and accounting. These departments can only produce better results
when aligned by common objectives and goals. Other company groups that can affect marketing plans
and strategies for example, if the Marketing department wants to increase sales by advertising, then;

 Finance must provide finances, budget allocation etc

 Human Resource should provide and plan for personnel

 Purchasing should purchase media time etc

All departments must “think consumer” if the firm is to be successful. The goal is to provide superior
customer value and satisfaction.

Overall company mission, objectives, policies and strategies can also affect the marketing strategies.
Marketing plans must be in line with overall corporate plans, objectives etc.

b. Suppliers

Suppliers are firms and individuals that provide the resources needed by the company and its
competitors to produce goods and services. They are an important link in the company’s overall
customer “value delivery system.”

i. One consideration is to watch supply availability (such as supply shortages).

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 ii. Another point of concern is the monitoring of price trends of key inputs. Rising supply costs
must be carefully monitored.
c. Distributors (Intermediaries).

Marketing intermediaries are firms that help the company to promote, sell, and distribute its goods
to final buyers. These include:

 Resellers are distribution channel firms that help the company find customers or make sales
to them. These include wholesalers and retailers who buy and resell merchandise. Resellers
often perform important functions more cheaply than the company can perform itself.
However, seeking and working with resellers is not easy because of the power that some
demand and use.

 Physical distribution firms help the company to stock and move goods from their points of
origin to their destinations. Examples would be warehouses (that store and protect goods
before they move to the next destination), transportation companies such as ZALAWI. These
may affect availability of products.

 Marketing service agencies (such as marketing research firms, advertising agencies, media
firms, etc.) help the company target and promote its products.

 Financial intermediaries (such as banks, credit companies, insurance companies, etc.) help
finance transactions and insure against risks.

d. Customers

The company must study its customer markets closely since each market has its own special
characteristics. These markets normally include:

i. Consumer markets - individuals and households that buy goods and services for personal
consumption.
ii. Business markets - buy goods and services for further processing or for use in their
production process.
iii. Reseller markets - buy goods and services in order to resell them at a profit.
iv. Government markets - agencies that buy goods and services in order to produce public
services or transfer them to those that need them.
v. International markets - buyers of all types in foreign countries.

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Customers are an important part of marketing. They may affect company sales and profits if they do
not buy the products.

e. Competitors

Every company faces a wide range of competitors. A company must secure a strategic advantage over
competitors by positioning their offerings to be successful in the marketplace. No single competitive
strategy is best for all companies.

f. Publics

A public is any group that has an actual or potential interest in or impact on an organization’s ability
to achieve its objectives. A company should prepare a marketing plan for all of their major publics as
well as their customer markets. Generally, publics can be identified as being:

i. Financial publics -influence the company’s ability to obtain funds.

ii. Media publics -carry news, features, and editorial opinion.
iii. Government publics -take developments into account.
iv. Citizen-action publics -a company’s decisions are often questioned by consumer
organizations.
v. Local publics--includes neighbourhood residents and community organizations.
vi. General publics - a company must be concerned about the general public’s attitude toward
its products and services.
vii. Internal publics - workers, managers, volunteers, and the board of directors.
Understanding the Macro Environmental Variables

Understanding of the macro-environmental variables is a key aspect of identifying threats

and opportunities in the marketing environment. The macro-environmental variables need
to be understood because even if they do not have an immediate impact on the performance
of the organisation, they do have an impact in the long term. Furthermore, understanding of
these variables is very key as they are outside the control of the organisation. In order to
make sense of this environment, the PESTLE framework is used. PESTLE stands for;

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 1. Political Environment
2. Economic Environment
3. Socio-cultural Environment
4. Technological Environment
5. Legal Environment
6. Ecological Environment
A detailed look at each of the 6 factors above follows below.

1. Political Environment
The political environment relates to the interaction between business, society and
government. Companies need to critically scan this environment as government does
play a role when it comes to the enactment and altering of certain laws and
regulations regarding the way business is conducted. For example, the PF
government threatened all millers that failure by them to reduce the escalating prices
for mealie- meal will result in the revocation of their licences. Another example could
be government’s intention’s to pass a law that will see interest rates capped in the
country.
Scanning the political environment is cardinal as companies can detect potential legal
and regulatory changes in their industry that may affect them negatively. Early
detection of such changes may give companies an opportunity to lobby government
through industry or trade bodies such as the Zambia Chamber of Commerce and
Industry (ZACCI) or the Zambia Association of Manufacturers (ZAM).
2. Economic Environment
An understanding of the economic environment is key as it will influence prices or
market demand within a particular industry for a particular firm or organisation.
Among some of the factors that will affect a firm in the economic environment
include;
 Wage Inflation – annual wage increases in a particular sector will depend on
the supply of labour in that sector. Where there is scarcity of supply, wages
usually increase and this will subsequently raise the cost of doing business.

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  Price Inflation – How much consumers pay for goods and services depends on
the rate of supply of those goods and services. If supply is scarce, there is
usually an increase in the price of that consumer good or service. (For
example, cement shortage). Inflation leads to lower demand for your products.
 Gross Domestic Product (GDP) per Capita – The combined output of goods and
services in a particular nation is a useful measure for determining relative
wealth between countries when comparisons are calculated per member of
the population.
 Exchange Rates – The relative value of a currency vis-à-vis another currency
is an important factor for those businesses operating in foreign or holding
financial reserves in other countries. For example, an appreciation of the
Kwacha may work to the advantage of those importing goods into Zambia than
those exporting.
 Income, sales and corporation taxes affect how goods and services are
marketed in different countries as these are pegged at different levels.
3. Socio-cultural Environment
Lifestyles are constantly changing and consumers are constantly shifting their
preferences over-time. Among some of the key considerations regarding the social-
cultural environment include; the changing nature of households, demographics,
lifestyles and family structures, and changing values in society.
 Changing Nature of Households – The number of families is reducing due to
family planning campaigns and most educated people stay single and marry
late.
 Demographics – These relate to the changes in population proportions. Among
some of the issues that deserve close attention are; the age structure of the
population, immigration issues, worker profiles (women V men).
 Lifestyles - In some sections of society, there is a trend where people are
marrying later, high divorce rates and an increasing tendency where people
are living alone.
 Changing Values – There are a number of values that are changing in society.
For example, homosexuality is acceptable and legal in certain countries.
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4. Technological Environment
The emergence of new technologies can affect not only high-technology businesses
but also non-technology businesses. For example both high-technology and non-
technology business can embrace technology oriented marketing through email and
web based marketing. Scanning of the technological environment will help marketers
to keep abreast with the technological advancement of their competitors as well as
the general technological and scientific advances that may have potential implications
on the goods and services they offer.
5. Legal Environment
The legal environment covers every aspect of an organisation’s business. Various
laws and regulations are enacted in most countries and organisations must ensure
that they operate within the confines of the law. Examples of laws and regulations
include; product safety laws, good practice in packaging and labelling laws and codes
of practice in advertising.
It is law that companies must provide products that are safe for consumers to
consume and action in terms of fines and criminal sentences can be meted on those
that do not conform to these laws. For example, most counterfeit goods do not
conform to this particular specification as they do not undergo tests and are produced
in unhealthy environments.
It is also law that all claims made in advertising must be substantiated by proof and
there must be no deception. Furthermore, comparative advertising maybe allowed in
one country such as the United Kingdom and is not allowed in another country such
as Zambia.
Companies must also ensure that their packaging and labelling standards conform to
the standards that are stipulated in the law such as correct labelling of products. A
good example is the current horse meat scandal where horse meat was labelled as
beef meat in Europe and South Africa.
6. Ecological Environment
An understanding of the ecological environment is important as consumers are
increasingly becoming more worried about the impact companies have on their
ecological environment. Marketing sustainability is therefore a key undertaking that
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an organisation should embrace. Among some of the green strategies that have been
suggested include;
 Eco-efficency – Developing lower costs costs through organisational
processes such as the promotion of resource productivity (eg. Energy
efficiency) and better utilisation of by-products. For example, Zambia Sugar
uses its by-product (molasses) for generation of electricity and to tar its road.
 Beyond Leadership Compliance – The adoption of a differentiation strategy
through organisational processes such as certified schemes to demonstrate
their ecological credentials and environmental excellence. Examples include
adoption of Environmental Management Systems such as ISO14001.
 Eco-Branding – The differentiation of a firm’s products or services to
promote environmental responsibility. For example, the Toyota Prius which
labelled mean but green signifies environmental responsibility.

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9 Marketing Organisation
Introduction

The topic of marketing organization fundamentally addresses the allocation of activities to groups.
The organisation of the marketing function take numerous forms depending on the size of the
organisation, size of the market, product portfolio of the organisation and the number of markets
that the organisation is serving. Below are 6 different approaches in how the marketing function
can be organised;

1. Functional Organisation
This form of marketing organisation consists of functional specialists reporting to a
marketing vice president, who co-ordinates their activities. Below is a figure that shows
how a functional organisation looks like;

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 Advantages
a) It is very simple when it comes to issues of administration.
b) There is room for specializing by function.
Disadvantages
a) The first disadvantage of this form of organisation is that it becomes a challenge to develop
smooth working relationships within the marketing department. Companies using this
organisation form must ensure that critical interfaces among field sales, customer service
and product management groups are improved as these collective interfaces have a major
impact on customer satisfaction.
b) Another disadvantage is that it leads to inadequate planning for specific markets and
products in the event that there is an increase in the markets being served and products
being sold. For example, products that are not favoured by anyone are neglected.
c) The last disadvantage is that each functional group competes with the other function for
budget and status.

2. Geographic Organisation
A company selling in a national market often organises its sales force (and sometimes other
functions, including marketing) along geographic lines. For example, the national sales
manager may supervise 6 regional sales managers, who in turn supervise 5 territory
managers and each of those territory managers will supervise sales representatives in their
respective territories. Furthermore, some organisations add area marketing specialists to
support the sales efforts in high volume, distinctive markets.
Advantages
a) This type of organisation helps companies to pin-point local problems and
opportunities.
b) It leads to better serving of customers as companies can come up with solutions tailored
to meet the needs of the respective region.
Disadvantage

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 a) This type of organisation is unlikely to work in areas that are sparsely populated or
where the cost of serving customers is high. Furthermore, it can be very strenuous on
the salesforce if they have cover very large geographical areas.
3. Product or Brand Management Organisation
Companies producing a variety of products and brands often establish a product (or brand)
management organisation. The product-management organisation does not replace the
functional management organisation but rather serves as another layer of management.
A product manager supervises product category managers, who in turn supervise specific
product and brand managers. A product management-management organisation makes
sense if the company’s products are quite different or if the sheer number of products is
beyond the ability of a functional marketing organisation.
The tasks for product and brand managers include;
 Developing a long term competitive strategy for the product.
 Preparing an annual marketing plan and sales forecast.
 Working with advertising and merchandising agencies to develop copy, programs
and campaigns.
 Stimulating support of the product among the salesforce and distributors.
 Gathering continuous intelligence on the product.
 Initiating product improvements to meet changing market needs.
Advantages

a) The product manager can concentrate on developing a coordinated and cost effective
marketing mix for the product.
b) The product manager can react more quickly to problems in the market place than a
committee of functional specialists.
c) Smaller brands are also not neglected because the product manager is their advocate.
d) It’s a good training ground for young executives as it involves every area of company
operations.
Disadvantages

a) Product management creates a lot frustration and conflict as product managers are not
given enough authority to carry out their responsibilities effectively. They have to rely on

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 their persuasion to get the cooperation of advertising, sales, manufacturing and other
departments.
b) Product managers rarely achieve functional expertise even if they are experts of their own
product.
c) This type of marketing organisation tends to be costly when a company has a large product
portfolio as it means appointing product managers for each product.
d) In instances where brand managers stay for a short time due to promotions or transfers, it
affects long term planning and long term health of the brand.
4. Market- Management Organisation
Where companies sell their products to diverse markets, market centred organizations
should be considered. Instead of managers focusing on brands, market managers
concentrate their energies on understanding and satisfying the needs of particular markets.
This marketing organisation form is used where companies sell their products to a diverse
set of markets. This type of marketing organisation is ideal when user groups fall into
distinct buying preferences and practices. For example, a company can be selling to
consumer, business and government markets.

The tasks of market managers include;

 Develop long-range and annual plans for their respective markets.
 Analysis of their market and identify what new products their company should offer
to their market.
The advantage of this type of organisation is that marketing activities are organised to to
meet the needs of distinct customer groups rather than focused on marketing functions or
regions.

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5. Product Management/Market Management (Matrix) Organisation
This type of marketing organisation is also called a matrix organisation and it is ideal when
companies produce many products that flow into many markets. Product managers are
responsible for their group of products’ sales and profit performance, and monitor
technological developments that impact on their products. Market managers focus on the
needs of customers in each market segment. Though the matrix organisation is suitable for
a company that is involved in multi-product and multi-markets, it is costly and creates a lot
of conflicts. It is costly in the sense that there are more managers to support. Conflicts arise
when it comes to the organisation of the sales force and setting of prices for a particular
product or market.

For the system to work effectively, clear lines of decision making authority need to be
drawn up because of the possible areas of conflict. For example, who decides the price of
the product? If a market manager requires an addition to the product line to meet the special
needs of some customers, who has the authority to decide if the extra costs are justified?
How should the salesforce be organized: along product or market lines? Also, it is a
resource hungry method of organization. Nevertheless, the dual specialism does promote
the careful analysis of both product and markets so that customer needs are met.

6. Corporate – Divisional Organisation

As multiproduct-multi companies grow, they often convert their larger product or market
groups into divisions. For Example, Zambeef. The divisions set up their own departments
and services. This state of affairs raises questions as to what marketing services and
activities should be retained at corporate headquarters. Divisonalised companies have
reached different answers to this question:

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 No corporate marketing – they don’t see the useful function of marketing at
corporate level and therefore, each division has its own marketing department.
 Moderate corporate marketing – some companies have a small corporate
marketing staff that performs a few functions such as: i) assisting top management
with overall opportunity evaluation ii) providing divisions with consulting
assistance on request iii) helping divisions that have little or no marketing and iv)
promoting the marketing concept throughout the organisation.
 Strong corporate marketing - This provides various marketing services to the
divisions such as specialised advertising services, marketing research services and
other miscellaneous services in addition to the preceding activities.

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10.0 Marketing Planning
Planning is the process of anticipating future events and determining strategies to achieve
organisational objectives in the future. Marketing Planning involves designing activities
relating to marketing objectives and the changing marketing environment. Marketing
Planning is the basis for all marketing strategies and decisions. All issues such as the
organisations product portfolio, distribution channels, marketing communications and
pricing are contained in the marketing plan. A marketing plan is a written document that acts
as a guidebook of marketing activities for the marketing manager.

Reasons for Writing a Marketing Plan

 A marketing plan helps in the setting of objectives and the respective actions required
to attaining those objectives.

 A marketing plan acts as a basis for measuring marketing performance by comparing

actual results and expected results.

 A marketing plan helps managers and employees work towards common goals as it
clearly stipulates the activities that need to be carried out.

Levels of Planning

There are three levels of planning and these include; corporate, division and product
planning.

a) Corporate strategic planning is the responsibility of the corporate headquarters

and its objective is to guide the whole enterprise. Among decisions that are entrusted
with the corporate headquarters include;

 Decisions on the amount of resources to allocate to each division. The

organisation may use the Boston Consulting Group matrix or the General
Electric model to help in the allocation of resources.

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  Decisions regarding which businesses to start maintain or eliminate. The BCG
matrix can also be used to make these decisions.

Guidelines for Strategic Objectives

1. Stars

 Businesses with high market share in a high market growth market

 They have moved to the position of leadership in a high growth market.

 They also generate large amounts of cash

 The primary objective is to maintain the current share

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2. Cash cows

 Businesses with a high share in a low growth market.

 Generate a lot of cash for the business but use very little.

 Typically follow a harvest strategy, where the company tries to increase short-term
cash flows

3. Question marks

 Businesses with a relatively low market share but operating in high-growth market.

 Require considerable sums of money for investment.

 Strategy is to build

4. Dogs

 Businesses that have a weak market share in a low-growth market

 Generate a low profit or incur a loss

 Objective is to divest or terminate

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b) Division Planning is done at the Division level and emphasises improvement of the
competitive position of a corporation’s products in the specific industry or market segment
served by that division. Porter’s generic competitive strategies can be used.

Designing Competitive Strategies

a) Porter’s Generic Strategies

Porter’s thesis is as follows:

• To compete successfully the strategist needs to select a generic strategy and pursue
it consistently

• The ways in which this night be done and the benefits and problems that might be
encountered are summarized in the figure below. (Wilson & Gilligan, p. 389)

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• There is no single “best” strategy even within a given industry, and the task faced by
the strategies is to select the strategic approach that will best allow it to maximize its
strengths vis-à-vis its competitors.

• This needs to be done by taking into account the five forces:

1. The bargaining power of suppliers

2. The bargaining power of customers

3. The threat of new entrants to the industry

4. The threat of substitute products/services

5. The rivalry among current competitors.

Overall cost leadership – the organization concentrates upon achieving the lowest costs of
production and distribution so that it has the capacity of setting its prices at a lower level
than its competitors.

Differentiation – the organization given emphasis to a particular element of the marketing

mix that is seen by customers to be important and at result, provides a meaningful basis for
competitive advantage.

Focus – the organization concentrates its efforts upon one or more narrow market segments,
rather than pursuing a broader – based strategy. By doing this, the firm is able to build a
greater in-depth knowledge of each of the segments, as well as creating barriers to entry by
virtue of its specialist reputation. Having established itself, the firm will typically then,
develops either a cost-based or differentiated strategy.

C) Functional Level Strategy - Functional strategy centres on how resources allocated to

the various functional areas can be used most efficiently and effectively to support the
business-level strategy. The primary focus of marketing strategy at this level is to allocate
and coordinate marketing resources and activities to achieve the firm’s objective within a
specific product market.

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Marketing Planning Process

The key elements that are contained in the marketing plan will be discussed below;

1.0. Defining the Business Mission

The foundation of any marketing plan is the firm’s mission statement which answers the
question, “What business are we in?” The way a firm defines its business mission profoundly
affects the firm’s long run resource allocation, profitability and survival. The mission
statement is based on a careful analysis of benefits sought by present and potential
customers and an analysis of existing and anticipated environmental conditions. The mission
statement must therefore focus on the market or markets that the organisation is attempting
to serve rather on the goods or services offered.

2.0. Conducting a Situational Analysis

Marketers must understand the current and potential environment that the product or
service will be marketed in. A situational analysis tries to answer the question, “Where are
now?” It tries to analyse a firm’s internal and external environment by using the SWOT
analysis; that is, the firm should identify its internal strengths (S) and weaknesses (W) and
also examine external factors in terms of opportunities (O) and threats (T).

When examining internal strengths and weaknesses, the marketing manager should focus
on factors such as;

 production costs (how high or low are our production costs?).

 marketing skills (do we have a strong or weak marketing talent).

 financial resources (do we have enough or inadequate financial resources?).

 company or brand image (is the company brand strong or weak?).

 Employee capabilities (how strong or weak are our employee capabilities?).

 Available technology (do we have the technology to compete with other players
in the market?).

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When analysing the external environment, marketing managers must focus on analysing
opportunities and threats through environmental scanning. environmental scanning refers
to the collection and interpretation of information about forces in the external environment
that may affect the future of the organisation or the implementation of the marketing plan.
The PESTLE tool is used to identify opportunities and threats posed by the external
environment and factors contained in the PESTLE tool include;

 Political forces – How stable or unstable is the political environment?

 Economic forces – What is the status quo of economic indicators such as interest
rates, target customer’s disposable incomes, inflationary pressures, exchange rates
e.t.c.?

 Social – cultural forces – What are the trends regarding the social cultural forces in
terms of family composition, changing society values e.t.c?

 Technological forces – Will technological advances affect our operations and can we
cope?

 Legal forces – What are the key changes in the legal framework and how do they
affect us?

 Ecological forces – How damaging are our products to the environment and what
can we do to help preserve the environment?

It must be mentioned that the organisation has control of factors in the internal environment
(SW) but has not control of forces in the external environment (OT) and it must therefore
find a strategic fit between these two forces.

3.0. Setting Marketing Plan Objectives

Once an organisation has carried out the situational analysis and knows where it is standing,
it must set marketing plan objectives. A marketing objective is a statement of what is to be
accomplished through marketing activities. Marketing objectives must meet the following
criteria;

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  Specific – They must not be ambiguous but specific in order to allow for easy
measurement.

 Realistic – Managers should develop objectives that have a chance of being met. A
new firm cannot possibly set an objective of taking over the market leadership
within the first year of being launched.

 Measurable – Managers need to be able to quantitatively measure whether or not

an objective has been met.

 Time bound – By what time must the objective be met?

 Compared to a benchmark – it is important to know the baseline against which

the objective will be measured

4.0. Marketing Strategy Crafting

Marketing strategy involves the activities of selecting and describing one or more target
markets and developing and maintaining a marketing mix that will produce mutually
satisfying exchanges with the target market.

4.1. Target Market Strategy

The organisation must decide which market segment to target. A market segment is a group
of individuals or organisations that share one or more characteristics or that share similar
needs. Target marketing is important as the organisation focuses its resources on the
intended market segment and this reduces wastage of resources.

4.2. Marketing Mix Strategy

The term marketing mix refers to a unique blend of tools (product, price, place and
promotion) designed to produce mutually satisfying exchanges with a target market. The
marketing manager can control each component of the marketing mix but the strategies for
all four components must be blended to achieve optimal results. Marketers can achieve
competitive success by devising the following marketing mix strategies

Product Strategies

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This is the starting point of the marketing mix because it is impossible to devise the place
strategy and promotional strategy without the product offering and product strategy. A
product can either be a tangible good or a service. A product strategy must ensure that all
aspects regarding the product are addressed as people do not buy things for what they do
(benefits) but also for what they mean to us (status, quality, or reputation).

Price

Price is what a buyer must give up to obtain a product and it is often the most flexible element
to change in the marketing mix. Marketers can raise or lower price more frequently and
easily than they can change other marketing mix variables. Price is a very important
competitive tool as it is the only element in the marketing mix that generates revenue for the
organisation.

Place/Distribution

Place or distribution strategies are concerned with making products available when and
where customers want them.

Promotion

Promotion strategies include advertising, public relations, sales promotions, and personal
selling. Promotions role is to inform, educate, persuade and remind customers of the benefits
of an organisation’s products.

5.0. Implementation and Control

Implementation is the process that turns a marketing plan into action assignments and
ensures that these assignments are executed in a way that accomplishes the marketing plan’s
objectives. Implementation activities may involve detailed job assignments, activity
descriptions, budgets, and lots of communication. It must be said that you can have a brilliant
marketing strategy but if it is poorly implemented, the strategy will be a failure.

Once a plan is chosen and implemented, its effectiveness must be monitored. Control
provides the mechanisms for evaluating marketing results in light of the plan’s objectives

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and for correcting mistakes that prevents the organisation to reach its objectives within
budget guidelines.

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11.0 Analysing Consumer Markets and Buyer Behaviour
Companies that study and understand how and why consumers behave the way they behave
when it comes to making purchases stand to benefit from that study and understanding.
Studying consumers provides clues for developing new products, product features, prices,
channels, messages, and other marketing mix elements

All individuals and households who buy or acquire goods and services for personal
consumption are termed as consumers. Markets have to be understood before marketing
strategies can be developed.

Consumer Buying Behaviour Vs Buyer Behaviour

There is a contrast between consumer behaviour and buyer behaviour and this contrast can
be seen in the definitions of the two concepts below.

Consumer behaviour is the study of the process involved when individuals or groups select,
purchase, use or dispose of products, services, ideas or experiences to satisfy needs and
desires

On the hand Buyer Behaviour reflects an emphasis on the interaction between buyers and
producers at the time or point of purchase.

The Consumer Proposition Acquisition Process

The consumer acquisition process consists of six distinct stages. The process is useful
because it highlights the importance and distinctiveness of proposition selection and re-
evaluation phases in the process. It is also important to mention that the buying process is
iterative because each stage can lead back to any of the previous stages in the process or
move forward to the next stage in the process.

Motive Development

This is the first stage in the model and arises when we decide we need to acquire a product.
This involves the initial recognition that a problem needs to be solved. To begin to solve a
problem, we must be aware of it. For example, a newly recruited graduate in a Bank who
decides that he/she needs to upgrade his wardrobe.

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Information Gathering

The second stage entails looking for alternative ways of solving our problems. The searching
of information may be active, overt or passive. Furthermore, the search can involve an
internal search where we consider what we already know about the problem we face and
the products we might buy to solve our problems. Or, it could be external where we do not
know enough of our problem and so we seek advice and supplementary information to help
us decide.

Proposition Evaluation

Once we feel that we have all the information that we need to make a decision, we evaluate
the proposition. The criteria that we may use in proposition evaluation can either be rational
(based on cost) or irrational (based on desire).

Proposition Selection

In most cases, the proposition that we eventually select is the one that we evaluate as fitting
our needs best beforehand. However, certain circumstances might cause to decide to re-
evaluate our propositions and acquire a different proposition when what we want is not
available.

Acquisition/Purchase

This takes place once the selection has been done and involves purchase or acquisition of the
proposition. There are different approaches to proposition acquisition. If a buyer is making
a routine purchase (purchase that we make regularly), we do not particularly get involved
in the decision making process. However, if a purchase is a specialised or infrequent
purchase, the buyer becomes much more involved in the decision making to ensure that the
proposition satisfies the buyer’s needs.

Re-Evaluation or Post purchase Evaluation

This happens after the acquisition stage and entails re-evaluating our actions. The re-
evaluation stage leads to Cognitive Dissonance a theory that suggests that we are motivated
to re-evaluate our beliefs, attitudes, opinions, or values if the position we hold on them at

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one point in time is not the same as the position we held at an earlier period due to some
intervening factors. Cognitive dissonance causes us to be psychologically uncomfortable and
leads to feelings of foolishness or regrets about a purchase decision that we have made. In
order to reduce cognitive dissonance, we actively avoid situations that might increase our
feelings of dissonance. Some of the actions we might take to reduce dissonance include;

 Selectively forget information.

 Minimise the importance of an issue, decision or act.

 Selectively expose ourselves only to new information that agrees with our existing
view (rather than information which doesn’t)

 Reverse a purchase decision, for instance by taking a product back or selling it for
what it was worth.

It is important to mention that the concept of cognitive dissonance is most prevalent in

purchase situations that entail high involvement such as the purchase of a car, house or high
value investment.

Choice Criteria

Choice criteria refers to the various features and benefits a customer uses when evaluating
products and services. Different people will use different criteria and the same criterion may
be used differently. It should also be noted that choice criteria change over time due to
changes in incomes and commitments in the family life cycle. There are four different types
of criteria used for deciding which brand to purchase and these are discussed below;

a) Technical Criteria

This choice criterion relates to the performance of the product and consumers consider
aspects such as reliability, durability, comfort and convenience.

b) Economic Criteria

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This choice criterion concerns the cost aspects of the purchase and includes the price and
running costs off the product. For example, people may decide to buy certain products
because of a reduction on price

c) Social Criteria

This choice criterion concerns the impact that the purchase makes on the person’s perceived
relationships with other people and the influence of social norms on the person. Key
considerations under this criterion include aspects like the social status, social belonging,
whether the product is fashionable or not fashionable in the eyes of society.

d) Personal Criteria

This criterion concerns how the product relates to the individual psychologically. People
may choose to buy brands that are in line with their self-image. For example some people
will view themselves as being young, trendy or successful executives and buy products that
reflect this conception. Other personal criterion considerations include risk reduction and
emotional considerations. Risk reduction affects choice because some people are risk averse
and choose to buy ‘safe brands’. People will use emotions because many purchase decisions
are experiential and may evoke feelings of fun, pride, pleasure boredom or sadness. For
example, some people find it boring to be using the same variant of a shower gel or bathing
soap and will therefore change the variant from time to time.

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MODEL OF CONSUMER BEHAVIOUR

Consumers make many buying decisions every day. Most large companies research
consumer buying decisions in great detail to answer questions about what consumers buy,
where they buy, how and how much they buy, when they buy, and why they buy. Marketers
can study actual consumer purchases to find out what they buy, where, and how much. But
learning about the whys of consumer buying behaviour is not so easy—the answers are often
locked deep within the consumer's head.

The central question for marketers is: How do consumers respond to various marketing
efforts the company might use? The company that really understands how consumers will
respond to different product features, prices, and advertising appeals has a great advantage
over its competitors. The starting point is the stimulus-response model of buyer behaviour
shown in Figure below. This figure shows that marketing and other stimuli enter the
consumer's "black box" and produce certain responses. Marketers must figure out what is in
the buyer's black box.

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Marketing stimuli consist of the four Ps: product, price, place, and promotion. Other stimuli
include major forces and events in the buyer's environment: economic, technological,
political, and cultural. All these inputs enter the buyer's black box, where they are turned
into a set of observable buyer responses: product choice, brand choice, dealer choice,
purchase timing, and purchase amount.

The marketer wants to understand how the stimuli are changed into responses inside the
consumer's black box, which has two parts. First, the buyer's characteristics influence how
he or she perceives and reacts to the stimuli. Second, the buyer's decision process itself
affects the buyer's behaviour. Consumer purchases are also influenced strongly by cultural,
social, personal, and psychological characteristics as we will see in the next unit. For the most

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part, marketers cannot control such factors, but they must take them into account when
devising marketing strategies.

FACTORS INFLUENCING CONSUMER BEHAVIOUR

There are four major factors that can influence the Buying decision of the buyer. These are
summarised in the figure below:

Figure 10.1: Factors influencing consumer behaviour

a. Cultural Factors

Cultural factors exert the broadest and deepest influence on consumer behaviour. The
marketer needs to understand the role played by the buyer's culture, subculture, and social
class.

I. Culture

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Culture is defined as the set of basic values, perceptions, wants and behaviours learned by a
member of society from family and other important institutions. It is the most basic cause of
a person's wants and behaviour. Human behaviour is largely learned. Growing up in a
society, a child learns basic values, perceptions, wants, and behaviours from the family and
other important institutions. A person normally learns or is exposed to the following values:
achievement and success, activity and involvement, efficiency and practicality, progress,
material comfort, individualism, freedom, humanitarianism, youthfulness, and fitness and
health.

Every group or society has a culture, and cultural influences on buying behaviour may vary
greatly from country to country. Failure to adjust to these differences can result in ineffective
marketing or embarrassing mistakes.

II. Subculture

Subculture is a group of people with shared value systems based on common life experiences
and situations. Each culture contains smaller subcultures or groups of people with shared
value systems based on common life experiences and situations. Subcultures include
nationalities, religions, racial groups, and geographic regions. Many subcultures make up
important market segments, and marketers often design products and marketing programs
tailored to their needs.

III. Social Class

Social Classes are society's relatively permanent and ordered divisions whose members
share similar values, interests, and behaviours. Social class is not determined by a single
factor, such as income, but is measured as a combination of occupation, income, education,
wealth, and other variables. Almost every society has some form of social class structure. In
some social systems, members of different classes are reared for certain roles and cannot
change their social positions. Marketers are interested in social class because people within
a given social class tend to exhibit similar buying behaviour. Social classes show distinct

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product and brand preferences in areas such as clothing, home furnishings, leisure activity,
and automobiles.

b. Social Factors

A consumer's behaviour also is influenced by social factors, such as the consumer's small
groups, family, and social roles and status.

I. Groups

Many small groups influence a person’s behaviour. Groups that have a direct influence and
to which a person belongs are called membership groups. In contrast, reference groups serve
as direct (face- to- face) or indirect points of comparison or reference in forming a person's
attitudes or behaviour. Reference groups to which they do not belong often influence people.
Marketers try to identify the reference groups of their target markets. Reference groups
expose a person to new behaviours and lifestyles, influence the person's attitudes and self-
concept, and create pressures to conform that may affect the person's product and brand
choices.

The importance of group influence varies across products and brands. It tends to be
strongest when the product is visible to others whom the buyer respects. Manufacturers of
products and brands subjected to strong group influence must figure out how to reach
opinion leaders—people within a reference group who, because of special skills, knowledge,
personality, or other characteristics, exert influence on others.

Many marketers try to identify opinion leaders for their products and direct marketing
efforts toward them. In other cases, advertisements can simulate opinion leadership, thereby
reducing the need for consumers to seek advice from others.

The importance of group influence varies across products and brands. It tends to be
strongest when the product is visible to others whom the buyer respects. Purchases of
products that are bought and used privately are not much affected by group influences
because neither the product nor the brand will be noticed by others.

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II. Family

Family members can strongly influence buyer behaviour. The family is the most important
consumer buying organization in society, and it has been researched extensively. Marketers
are interested in the roles and influence of the husband, wife, and children on the purchase
of different products and services

Husband-wife involvement varies widely by product category and by stage in the buying
process. Buying roles change with evolving consumer lifestyles.

Children may also have a strong influence on family buying decisions. For example, parents
are now considering places where their children can be entertained while having dinner. It
is not surprising then to find some eating places with jumping castles for kids. Also we buy
food that children like or enjoy to eat. In the case of expensive products and services,
husbands and wives often make joint decisions.

III. Roles and Status

A person belongs to many groups—family, clubs, organizations. The person's position in

each group can be defined in terms of both role and status. A role consists of the activities
people are expected to perform. Each role carries a status. People therefore choose products
that communicate their role and status in society.

c. Personal Factors

A buyer's decisions also are influenced by personal characteristics such as the buyer's age
and lifecycle stage, occupation, economic situation, lifestyle, and personality and self-concept.

I. Age and Life-Cycle Stage

People change the goods and services they buy over their lifetimes. Tastes in food, clothes,
furniture, and recreation are often age related. Buying is also shaped by the stage of the
family life cycle—the stages through which families might pass as they mature over time.
Marketers often define their target markets in terms of life-cycle stage and develop
appropriate products and marketing plans for each stage. Traditional family life-cycle stages
include young singles and married couples with children.

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II. Occupation

A person's occupation affects the goods and services bought. Blue-collar workers tend to buy
more rugged work clothes, whereas white-collar workers buy more business suits.
Marketers try to identify the occupational groups that have an above-average interest in
their products and services.

A company can even specialize in making products needed by a given occupational group.
Thus, computer software companies will design different products for brand managers,
accountants, engineers, lawyers, and doctors.

III. Economic Situation

A person's economic situation will affect product choice. Marketers of income-sensitive

goods watch trends in personal income, savings, and interest rates. If economic indicators
point to a recession, marketers can take steps to redesign, reposition, and re-price their
products closely.

IV. Lifestyle

Life style is a person's pattern of living as expressed in his or her psychographics. It involves
measuring consumers' major AIO dimensions—activities (work, hobbies, shopping, sports,
social events), interests (food, fashion, family, recreation), and opinions (about themselves,
social issues, business, products). People coming from the same subculture, social class, and
occupation may have quite different lifestyles. Lifestyle captures something more than the
person's social class or personality. It profiles a person's whole pattern of acting and
interacting in the world.

V. Personality and Self-Concept

Personality refers to the unique psychological characteristics that lead to consistent and
lasting responses to the consumer’s environment. Each person's distinct personality
influences his or her buying behaviour. Personality is usually described in terms of traits
such as self-confidence, dominance, sociability, autonomy, defensiveness, adaptability, and

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aggressiveness. Personality can be useful in analyzing consumer behaviour for certain
product or brand choices. For example, coffee marketers have discovered that heavy coffee
drinkers tend to be high on sociability. Thus, to attract customers, Starbucks and other
coffeehouses create environments in which people can relax and socialize over a cup of
steaming coffee.

Self-concept or self-image is based on the premise that people's possessions contribute to

and reflect their identities; that is, "we are what we have." Thus, in order to understand
consumer behaviour, the marketer must first understand the relationship between
consumer self-concept and possessions. For example, the founder and chief executive of
Barnes and Noble, the nation's leading bookseller, notes that people buy books to support
their self-images.

d. Psychological Factors

A person's buying choices are further influenced by four major psychological factors:
motivation, perception, learning, and beliefs and attitudes.

I. Motivation

A person has many needs at any given time. Some are biological, arising from states of
tension such as hunger, thirst, or discomfort. Others are psychological, arising from the need
for recognition, esteem, or belonging. Most of these needs will not be strong enough to
motivate the person to act at a given point in time. A need becomes a motive when it is
aroused to a sufficient level of intensity. A motive (or drive) is a need that is sufficiently
pressing to direct the person to seek satisfaction.

III. Perception

Perception is the process by which people select, organize, and interpret information to form
a meaningful picture of the world. A motivated person is ready to act. How the person acts is
influenced by his or her own perception of the situation. All of us learn by the flow of
information through our five senses: sight, hearing, smell, touch, and taste. However, each of
us receives, organizes, and interprets this sensory information in an individual way.

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IV. Learning

Learning describes changes in an individual's behaviour arising from experience. This means
that when people act, they learn. Learning theorists say that most human behaviour is
learned. Learning occurs through the interplay of drives, stimuli, cues, responses, and
reinforcement. If experience with a product or service is rewarding, consumers will probably
demand more of it and vice-versa. Marketers can build demand for a product by associating
it with strong drives, using motivating cues and providing positive reinforcement.

V. Beliefs and Attitudes

A belief is a descriptive thought that a person has about something. An attitude is a person’s
relatively consistent evaluations, feelings, and tendencies toward an object or idea. Through
doing and learning, people acquire beliefs and attitudes. These, in turn, influence their
buying behaviour. Attitudes are difficult to change. A company should then try to fit its
products into existing attitudes rather than attempt to change attitudes.

Buying behaviour differs greatly for a tube of toothpaste, a tennis racket, an expensive
camera, and a new car. More complex decisions usually involve more buying participants
and more buyer deliberation. Figure12.1 shows types of consumer buying behaviour based
on the degree of buyer involvement and the degree of differences among brands.

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 12 Market Segmentation
Market segmentation is the division of a market into different groups of customers with distinctly
similar needs and product requirements. Put in another way, market segmentation is the division of
a mass market into identifiable and distinct groups or segments, each of which have common
characteristics and needs and display similar responses to marketing actions. There are number of
reasons that make market segmentation an important undertaking in marketing and these include;

 It forms an important foundation for successful formulation of marketing strategies and

activities.
 It ensures that the elements of the marketing mix are designed to meet particular needs of
different customer groups.
 It enables the effective use of scarce/finite organisational resources to provide offerings for
selected groups of people. Under normal circumstances, a company has limited resources and
it is not possible to produce all possible products, for all the people, all of the time. Companies
must therefore choose only the best opportunities to pursue.
The STP Process

The STP process refers to the three activities that are undertaken in the sub-division of whole
markets into market segments in a sequential manner.

The STP process is increasingly being used because of the realisation of the prevalence of mature
markets, greater diversity in customer needs and the ability to reach specialised, niche segments. The
three activities in the STP process are outlined below;

Segmentation Target Marketing Positioning

Identifying Similar Identify Group to Create a concept to

Groups of customers aim for appeal to target
market

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SEGMENTATION

SEGMENTING CONSUMER MARKETS/ BASES OF SEGMENTATION

A marketer has to try different segmentation variables, alone and in combination, to find the best
way to view the market structure. The major variables or bases that might be used in segmenting
markets include; geographic, demographic, psychographic, and behavioural variables.

a) Geographic Segmentation

This calls for dividing the market into different geographical units such as nations, regions, states,
counties, cities, or neighbourhoods. A company may decide to operate in one or a few geographical
areas, or to operate in all areas but pay attention to geographical differences in needs and wants. It
is common to localize products, advertising, promotions, and sales efforts to fit the needs of
geographical areas (regions, cities, and even neighbourhoods).

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b) Demographic Segmentation

Demographic segmentation divides the market into groups based on variables such as age, gender,
family size, family life cycle, income, occupation, education, religion, race, and nationality.
Demographic factors are the most popular bases for segmenting customer groups. One reason is that
consumer needs, wants, and usage rates often vary closely with demographic variables. Another is
that demographic variables are easier to measure than most other types of variables. Even when
market segments are first defined using other bases, such as benefits sought or behaviour, their
demographic characteristics must be known in order to assess the size of the target market and to
reach it efficiently.

I. Age and Life-Cycle Stage

Age and life cycle segmentation consists of offering different products or using different marketing
approaches for different age and life-cycle groups. Marketers must guard against stereotypes when
using this form of segmentation. While certain age and life cycle groups do behave similarly, age is
often a poor predictor of a person’s life cycle, health, work or family status, needs, and buying power.
For example, not all consumers aged between 25 and 30 have the same weight that they can wear
clothes of the same size. Consumer needs and wants change with age. Some companies use age and
life cycle segmentation, offering different products or using different marketing approaches for
different age and life-cycle groups.

II. Gender segmentation

This calls for dividing a market into different groups based on sex. This segmentation form has long
been used for clothing, cosmetics, toiletries, and magazines. New opportunities in this area are
emerging such as automobiles, deodorants, and financial services. There is an increased emphasis on
marketing and advertising to women. Specialized Web sites are becoming very popular with this
group.

III. Income segmentation

It consists of dividing a market into different income groups. Marketers for automobiles, boats,
clothing, cosmetics, financial services, and travel have long used this form of segmentation. Using this

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form, marketers must remember that they do not always have to target the affluent. Other income
groups are also viable and profitable market segments.

c) Psychographics segmentation

It calls for dividing a market into different groups based on social class, lifestyle, or personality
characteristics. The use of AIO (Activities, Interests and Opinions) dimensions are also used in this
segmentation method. The AIO dimensions are used to divide the market on how people “Think and
Act”. People in the same demographic class can exhibit very different psychographics characteristics.
As previously seen in, lifestyle also affects people’s interest in various goods, and the goods they buy
express those lifestyles. This method of segmentation is gaining in popularity. Personality variables
can also be used to segment markets. Marketers will give their products personalities that
correspond to consumer personalities.

d) Behavioural segmentation

It involves dividing a market into groups based on consumer knowledge, attitudes, uses, or responses
to a product. Many marketers believe that behaviour variables are the best starting point for building
market segments. Occasion segmentation consists of dividing the market into groups according to
occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item.
Benefit segmentation involves dividing the market into groups according to the different benefits
the consumers seek from the product. Companies can use benefit segmentation to clarify the benefit
segment to which they are appealing, its characteristics, and the major competing brands. They can
also search for new benefits and establish brands that deliver them. User status can also be used to
divide the market. Segments of nonusers, ex-users, potential users, first-time users, and regular users
of a product are potential ways to segment. Usage rates are another way that marketers segment
markets. These categories might be light, medium, and heavy user groups. Loyalty status can also be
used to segment markets. Consumers can be loyal to brands, stores, and companies. Consumers can
be completely loyal, somewhat loyal, or not loyal at all. An amazing amount of information can be
uncovered by studying loyalty patterns.

d) Multi-attribute segmentation

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This involves using multiple segmentation bases in an effort to identify smaller, better-defined target
groups. Today there is a trend toward targeting multiple segments. Very often, companies begin their
marketing with one targeted segment, and then expand into other segments. This often boosts a
company’s competitive advantage and knowledge of the customer base. One of the most promising
developments in multivariable segmentation is “geodemographic” segmentation based upon both
geographic and demographic variables.

Target Marketing

After evaluating the different segments, the company must decide which and how many segments it
will target. A target market consists of a set of buyers who share common needs or characteristics
that the company decides to serve. Note that market segmentation is simply the dividing of the
market where as target marketing is selecting or choosing the segment to go for or serve. A company
can decide to serve the segments in a number of ways discussed below.

Target Segment Evaluation Criteria

In order to target the most appropriate segment, a criterion is needed to guide the process and below
is an outline of the key aspects in the criteria

Distinct – Is each segment clearly different from other segments? If so, different marketing mixes
will be necessary.

Accessible – Can buyers be reached through appropriate promotional programmes and distribution
channels?

Measurable – Is the segment easy to identify and measure?

Profitability – Is the segment sufficiently large to identify and measure

OTHER CRITERIA TO EVALUATE MARKET SEGMENTS

Three factors must be considered when evaluating different market segments: segment size and
growth, segment structural attractiveness, and company objectives and resources.

Segment Size and Growth

The company must first collect and analyze data on current segment sales, growth rates, and
expected profitability for various segments. It will be interested in segments that have the right size

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and growth characteristics. But "right size and growth" is a relative matter. The largest, fastest-
growing segments are not always the most attractive ones for every company. Smaller companies
may lack the skills and resources needed to serve the larger segments or may find these segments
too competitive. Such companies may select segments that are smaller and less attractive, in an
absolute sense, but that are potentially more profitable for them.

Segment Structural Attractiveness

The company also needs to examine major structural factors that affect long-run segment
attractiveness. For example, a segment is less attractive if it already contains many strong and
aggressive competitors. The existence of many actual or potential substitute products may limit
prices and the profits that can be earned in a segment. The relative power of buyers also affects
segment attractiveness. Buyers with strong bargaining power relative to sellers will try to force
prices down, demand more services, and set competitors against one another—all at the expense of
seller profitability. Finally, a segment may be less attractive if it contains powerful suppliers who can
control prices or reduce the quality or quantity of ordered goods and services.

Company Objectives and Resources.

Even if a segment has the right size and growth and is structurally attractive, the company must
consider its own objectives and resources in relation to that segment. Some attractive segments could
be dismissed quickly because they do not mesh with the company's long-run objectives. Even if a
segment fits the company's objectives, the company must consider whether it possesses the skills
and resources it needs to succeed in that segment. If the company lacks the strengths needed to
compete successfully in a segment and cannot readily obtain them, it should not enter the segment.
Even if the company possesses the required strengths, it needs to employ skills and resources
superior to those of the competition in order to really win in a market segment. The company should
enter only segments in which it can offer superior value and gain advantages over competitors.

Target Marketing Approaches

There are several approaches that marketers can use to determine the number of segments to enter
and these are explained below;

a) Undifferentiated (Mass) Marketing

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This is a market coverage strategy in which a firm ignores market segment differences and goes after
the whole market with one offering. For instance, Coca-cola once had only one type of coke packaged
in the same bottle design everywhere. This strategy focuses on what is common in the needs of the
consumers rather than on what is different. The company designs a product and a marketing program
that will appeal to the largest number of buyers. It relies on mass distribution and mass advertising,
and it aims to give the product a superior image in people's minds. However, most modern marketers
have strong doubts about this strategy. Difficulties arise in developing a product or brand that will
satisfy all consumers. Moreover, mass marketers often have trouble competing with more focused
firms that do a better job of satisfying the needs of specific segments and niches.

b) Differentiated (Segmented) Marketing

Using a differentiated marketing strategy, a firm decides to target several market segments or niches
and designs separate offers for each. Toyota tries to produce a car for every "purse, purpose, and
personality." Nike offers athletic shoes for a dozen or more different sports, from running, fencing,
and aerobics to bicycling and baseball. By offering product and marketing variations, these
companies hope for higher sales and a stronger position within each market segment. Developing a
stronger position within several segments creates more total sales than undifferentiated marketing
across all segments. Procter and Gamble gets more total market share with eight brands of laundry
detergent than it could with only one. But differentiated marketing also increases the costs of doing
business. A firm usually finds it more expensive to develop and produce, say, 10 units of 10 different
products than 100 units of one product. Developing separate marketing plans for the separate
segments requires extra marketing research, forecasting, sales analysis, promotion planning, and
channel management. Thus, the company must weigh increased sales against increased costs when
deciding on a differentiated marketing strategy.

c) Concentrated (Niche) Marketing

This market-coverage strategy, concentrated marketing, is especially appealing when company

resources are limited. Instead of going after a small share of a large market, the firm goes after a large
share of one or a few segments or niches. Concentrated marketing provides an excellent way for small
new businesses to get a foothold against larger, more resourceful competitors. Through concentrated
marketing, firms achieve strong market positions in the segments or niches they serve because of
their greater knowledge of the segments' needs and the special reputations they acquire. They also
enjoy many operating economies because of specialization in production, distribution, and

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promotion. If the segment is well chosen, firms can earn a high rate of return on their investments.
At the same time, concentrated marketing involves higher-than-normal risks. The particular market
segment can turn sour. Or larger competitors may decide to enter the same segment.

d) Micromarketing (Local or Individual Marketing)

This is the practice of tailoring products and marketing programs to suit the needs and wants of
specific individuals and local customer groups. It includes; Local Marketing which is tailoring brands
and promotions to needs and wants of local customer groups e.g cities, neighborhoods etc. This
strategy can be effective in the face of pronounced regional and local differences in demographics
and lifestyles. The drawback of this strategy is that it can drive up manufacturing and marketing costs
by reducing economies of scale. It can also create logistics problems as companies try to meet the
varied requirements of different regional and local markets. The overall brand image may also be
diluted especially if the product and message vary too much in different localities.

e) Individual marketing (one-to-one or customized marketing) which involves tailoring

products and marketing programs to needs and preferences of individual customers. Although this
is effective for relationship building with customers, this strategy can be costly.

Positioning

Positioning is the unique place for our product/service relative to the competition in the mind of our
customer. Positioning is the means by which goods and services can be differentiated and so give
consumers a reason to buy. There are two major fundamental elements that encompass positioning.
The first element concerns the physical or intangible attributes, the functionality and the capability
that a brand offers. The second positioning element concerns the way in which a brand is
communicated and how consumers perceive the brand relative to other competing brands in the
marketplace. The attributes and design of the product alone are not enough for successful positioning
just as communication of the product alone is not enough. For example, claims through
communication that a detergent paste is powerful and will remove all dirty from clothing will be
rejected if the product fails to deliver. Positioning, therefore, is about how customers judge a
product’s value relative to competitors, its ability to deliver against the promises made and the
potential customers have to derive value from the offering.

Positioning Strategies

A number of positioning strategies that firms can use are explained below;

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 i. Positioning by Product Attributes and Benefits – This a common positioning approach
and entails setting the brand apart from the competition on the basis of the specific
characteristics or benefits offered. Marketers attempt to identify the salient features (those
that are important to customers) and use them. They can use one or more features.
ii. Positioning by Price/Quality – Marketers often use price/quality characteristics to
position their brands. This is common for premium brands to justify a premium price.
Another way this method is used is when the focus is on the quality and value offered by a
product at a very competitive price.
iii. Positioning by Use or Application – This is where you position the brand by associating it
with a specific use.
iv. Positioning by Product Class – This positioning strategy entails positioning your product
category against another product category as competition often comes from a product that
comes from outside the class.
v. Positioning by Product user – This strategy entails positioning a product by associating it
with a particular user or group of users.
vi. Positioning by Competitor – This approach entails positioning yourself against the
competition. For example Euro Buses has taken up a positioning strategy of not having ‘ghost
passengers’ each time their buses are loading in contrast to some of its competitors.
vii. Positioning by Cultural Symbol – This is a positioning strategy that entails using a
meaningful cultural symbol to differentiate brands. For example, mothers pride used by
National Milling depicts this positioning strategy.

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13 The Need for Information – The Marketing Information System
The marketing environment is changing at an accelerating rate and the need for real time
information is greater now than at any time in history. The world has become globalised,
consumer preferences keep changing and competition has become immense. Kotler (2000)
points out that marketing is now becoming more of a battle based on information rather than
sales power. Companies with superior information are likely to enjoy a competitive
advantage as they can;

 choose better markets

 develop better offerings
 and execute better marketing planning.
In order for companies to come up with the right product for the right market or to produce
an advert that appeals to the target audience, companies need to have information readily
available to address specific problems or opportunities in the marketing environment.
Companies study their information needs and design Marketing Information System (MIS)
to meet these needs.

Marketing Information System (MIS) Defined

A marketing information system consists of people, equipment and procedures to gather,

sort, analyse, evaluate and distribute needed timely and accurate information to marketing
decision makers. The marketing information system therefore provides timely information
to decision makers on a continuous basis. Examples of information needs for marketers
include;

 Historical information such as sales, profitability and market trends.

 Externally focused marketing information (Macro and industry trends).
 Qualitative marketing information such as competitor strategy and buyer behaviour.
 Quantitative marketing information such as costs, profit and market share.
Basic Rules for Building a Marketing Information System

1. Get the top management involved.

2. Set the objectives for the system.

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 3. Figure out what decisions your MkIS will influence.
4. Communicate the benefit of the system to the users.
5. Hire and motivate the right people.
6. Free the MkIS from accounting domination.
7. Develop the system on a gradual and systematic basis.
8. Run a new MkIS in parallel with existing procedures.
9. Provide results from the system to users quickly after its initiation.
10. Provide information on a fast turnaround basis.
11. Tie the MkIS with existing data collection procedures.
12. Balance the work of the MkIS between development and operations.
13. Feed valid meaningful data into the system and not useless information.
14. Design a security system to ensure different groups get different access to the
information.
The Components of a Marketing Information System

The role of a MIS is to assess the manager’s information needs, develop the needed
information and distribute that information in a timely fashion. This information is
developed through internal company records, marketing intelligence activities, marketing
research and the marketing decision support system. An in-depth of the components of a
Marketing information system will be done below;

a) Internal Record System

Marketing managers rely on internal reports on orders, sales, prices, costs, inventory,
and receivables and so on. By analysing this information, they can spot important
opportunities and problems. Two important components of the internal record
system include the Order-to-Payment Cycle and the Sales Information System.
The order-to-payment cycle information is important as it shows when an order is
placed, dispatched, whether everything on the order is fulfilled and when payment is
made. Companies need to perform these steps quickly and accurately as they have a
direct impact on the satisfaction of the customer. Most companies have resorted to
the use of Electronic Data Interchange or company intranets to improve the speed,

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 accuracy and efficiency of the order-to-payment cycle. A good example is Shoprite
that have introduced an online system for their B2b orders.
A Sales Information System on the other hand has to provide up-to the minute
reports on current sales to managers for them to make quick decisions on lines that
are either moving slowly or too fast.
b) Marketing Intelligence System
The marketing intelligence system is a system that is supposed to supply information
on what is happening. A marketing intelligence system is defined as a set of
procedures and sources used by managers to obtain everyday information about
various developments in the marketing environment. Marketing managers can collect
marketing intelligence information by reading books, newspapers, trade
publications, talking to customers, suppliers and meeting with other company
managers. There are number of ways in which a company can improve its collection
of intelligence information and these are outlined below;
 Train and motivate sale personnel to spot and report new developments as
they are the eyes and ears of the company.
 The company can also motivate distributors, retailers and other
intermediaries to pass along important information. For example,
intermediaries can report on issues such as product performance, faulty
products or expired products.
 Companies can learn about competitors by purchasing their products,
attending trade shows, reading competitor’s published reports, collecting
competitor’s adverts and reading trade association papers.
 The company can purchase information from outside suppliers such as Ipsos
Zambia who gather information on the advertising spend on different media.
c) Marketing Decision Support System (MDSS)
A Marketing Decision Support System (MDSS) is used by most organisations to help
their managers make better decisions. A Marketing Decision Support System
(MDSS) is defined as a co-ordinated collection of data, systems, tools and techniques
with supporting software and hardware by which an organisation gathers and
interprets relevant information from the business and environment and turns it into
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 a basis for marketing action. A good example is the DHL tracking system which can
help the organisation identify areas where shipments are delayed. An MDSS can also
be helpful in areas such as Call Plans for sales people and analysis of promotions e.t.c.
d) Marketing Research
Marketing managers often commission formal marketing studies of specific problems
and opportunities. They may request a market survey, a product-preference test or
an advertising evaluation.

Marketing Research Defined

Marketing research is the systematic design, collection, analysis and reporting of data
and findings relevant to a specific marketing situation facing the company.

The importance of marketing research cannot be under estimated as it links the

consumer, customer and the public to the marketer through information which is
used to;

 Identify and define marketing opportunities

 Generate, refine and evaluate marketing actions
 Improve understanding of marketing as a process and how specific marketing
activities can be made more effective.
COMMISSIONING MARKETING RESEARCH

Undertaking of marketing research is an activity that can be carried out internally or

externally and largely depends on the size of the organisation and the type of
products it handles. However, many large companies and small companies alike
employ market research agencies to conduct research on their behalf. The main
advantages of employing research agencies include;

 It is relatively cheap to engage market research agencies compared with

undertaking the research in-house as they spread their fixed costs over
numerous projects.
 Research agencies also offer some degree of objectivity and independence as
they conduct the research and in their report findings.

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On the other hand, the use of research agencies also presents some disadvantages
and these include;

 The agency cannot achieve the depth of knowledge of the client’s problems,
product or market unless it offers specialism in this area.
Agency Selection Criteria

Agencies are shortlisted to offer their services based on a certain criteria and they
may be asked to make a presentation of their services. Visits are made to their
premises to check the quality of their staff and facilities, and previous reports maybe
considered to assess the quality of the organisation’s work. Furthermore, permission
to interview or obtain references from some of their other clients may also be
requested. Each agency will be evaluated based on its ability to carry out work of
acceptable quality and at an appropriate price. The criteria used to evaluate the
agencies suitability, once they have submitted a proposal might include;

 The reputation of the agency.

 The perceived expertise of the agency
 Time taken to complete the study
 Likelihood of research design providing insights into the management
problem
Examples of agencies in Zambia offering marketing research services include Ipsos
Zambia (Formerly Synovate) and Research International.

The Marketing Research Brief

The research brief is a formal document prepared by a client organisation submitted

to the marketing research agency. A research brief is given to shortlisted candidates
as a preliminary outline of the client’s needs and as a guide to submit proposals on
research methodology, timing and costs. However, if the marketing research is to be
conducted in-house, the departmental manager who requires the research prepares
a brief for the Marketing Research Manager. The brief should outline a management
problem to be investigated and the contents of the brief include;

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  Background summary – provides a brief introduction and details about the
company and its products and/or services that the organisation offers.
 The Management Problem – a clear statement of why the research should be
undertaken and what business decisions are dependent upon its outcome.
 The Marketing Research Questions – a detailed list of the information
necessary in order to make the decisions above.
 The intended scope of the research – the areas to be covered, which
industries, type of customer should be provided. The brief should give an
indication of when the information is required and explain why that date is
important (e.g pricing research required for a sales forecasting meeting)
 Tendering procedures – The client organisation should outline how agencies
are to be selected as a result of the tendering process. Specific information may
be required such as CVs from agency personnel to be involved in the study and
referee contact addresses.
The Marketing Research Process
Before a researcher can provide managers with information, they must know what kind of
problem the manager wishes to solve. The marketing research process has the following four
steps:

1. Defining the problem and research objectives

2. Developing the research plan,

3. Implementing the research plan, and

4. Interpreting and reporting the findings.

Now we will discuss these steps in detail:

1. Defining the problem and research objectives

This process occurs when an organisation provides a marketing research brief defining the
management problem. An example of a problem could be that sales of Shoprite Zambia (a
subsidiary of Africa Supermarkets Group) are not as strong as expected in Zambia.

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2. Developing the research plan,

3. Implementing the research plan, and

4. Interpreting and reporting the findings.

Step 1 Defining the Problem and Research Objectives

The marketing manager and the researcher must work closely together to define the
problem carefully and agree on the research objectives. Marketing managers must know
enough about marketing research to help in the planning and to interpret research results.
Defining the problem and research objectives is often the hardest step in the process. After
the problem has been defined carefully, the manager and researcher must set the research
objectives. The three general types of objectives are:

1). Exploratory research where the objective is to gather preliminary information that will
help to better define problems and suggest hypotheses for their solution.

2). Descriptive research is where the intent is to describe things such as the market
potential for a product or the demographics and attitudes of customers who buy the product.

3). Casual research is research to test hypotheses about cause-and-effect relationships.

The statement of the problem and research objectives will guide the entire research process.
It is always best to put the problem and research objectives statements in writing so
agreement can be reached and everyone knows the direction of the research effort.

Step 2 Developing the Research Plan

The second stage of marketing research entails developing the most efficient plan for
gathering the needed information. Designing the research plan calls for making decisions
such as the research approach, data sources and sampling plan.

Research Design

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The function of a research design is to ensure that the evidence obtained enables us to
answer the research question as unambiguously as possible! Given the research question
what type of evidence is needed to answer the question in a convincing way?

There are generally three categories of research design and these are explained below.

i. Exploratory Research
Is used when little is known about a particular management problem and to discover
the general nature of the questions that might relate to it. Qualitative methods tend
to be adopted in an exploratory research such as focus groups, in-depth interviews
and observational methods.
ii. Descriptive Research
This research design method focuses on accurately describing the variables being
considered. It uses quantitative methods, particularly questionnaire surveys. For
example, this design is used in consumer profile studies, product usage studies, price
surveys, sales analysis and media research.
iii. Causal Research
In developing the research plan, the attempt is to determine the information needed (outline
sources of secondary data), develop a plan for gathering it efficiently, and presenting the plan
to marketing management. The plan spells out specific research approaches, contact
methods, sampling plans, and instruments that researchers will use to gather new data. The
firm should know what data already exists before the process of collecting new data begins.
Developing the research plan involves all of the following:

1. Determining Specific Information Needs

2. Gathering Secondary Information

3. Planning Primary Data Collection

1). Determine specific information needs.

In this step research objectives are translated into specific information needs. For example,
determine the demographic, economic, and lifestyle characteristics of a target audience.

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2). Gathering secondary information.

Secondary data is information that already exists somewhere, having been collected for
another purpose. Sources of secondary data include both internal and external sources.
Companies can buy secondary data reports from outside suppliers (i.e., commercial data
sources). Information can also be obtained by using commercial online databases. Examples
include CompuServe, Dialog, and Lexis-Nexus. Many of these sources are free.

Advantages of secondary data include:

•It can usually be obtained more quickly and at a lower cost than primary data. This is
because secondary data readily available.

•It is a good starting point and gives background information in research

•Sometimes data can be provided that an individual company could not collect on its own.
Take for example information collected by the Central Statistical Office in Zambia.

Some problems with collecting secondary data include:

•The needed information might not exist.

•Even if the data is found, it might not be useable or might be outdated.

The researcher must evaluate secondary information to make certain it is relevant, accurate,
current, and impartial. Secondary data is a good starting point; however, the company will
often have to collect primary data.

3. Planning for Primary Data Collection

Primary data is information collected for the specific purpose at hand. A plan for primary
data collection calls for a number of decisions on research approaches, sampling plans, and
research instruments.

Research Approaches:

Research approaches can be listed as:

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1. Observational research

This is where information is gained by observing relevant people, actions, and situations.
However, some things such as feelings, attitudes, motives, and private behaviour cannot be
observed. Mechanical observation can be obtained through single source data systems. This
is where electronic monitoring systems link consumers’ exposure to television advertising
and promotion (measured using television meters) with what they buy in stores (measured
using store checkout scanners).

Observational research can be used to obtain information that people are unwilling or unable
to provide.

2. Survey research

This is the gathering of primary data by asking people questions about their knowledge,
attitudes, preferences, and buying behaviour. Survey research is best suited for gathering
descriptive information. Survey research is the most widely used form of primary data
collection. The major advantage of this approach is flexibility while the disadvantages
include the respondent being unwilling to respond, giving inaccurate answers, or unwilling
to spend the time to answer.

3. Experimental research

Experimental research involves the gathering of primary data by selecting matched groups
of subjects, giving them different treatments, controlling related factors, and checking for
differences in-group responses. This form of research tries to explain cause-and effect
relationships. Observation and surveys may be used to collect information in experimental
research. This form is best used for causal information.

Sampling Plans

Sampling plans are used to outline how samples will be constructed and used. A sample is a
segment of the population selected for marketing research to represent the population as a
whole. Marketing researchers usually draw conclusions about large groups of consumers by

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studying a small sample of the total consumer population. Designing a sample calls for three
decisions:

a. Who is to be surveyed (what sampling unit)?

b. How many people should be surveyed (what sample size)?

c. How should the sample be chosen (what sampling procedure)?

Kinds of samples include:

a. Probability samples--each population member has a known chance of being included in

the sample, and researchers can calculate confidence limits for sampling error.

b. Nonprobability samples--sampling error cannot be measured.

Research Instruments:

In collecting primary data, marketing researchers have a choice of two main research
instruments—the questionnaire and mechanical devices. The questionnaire is by far the
most common instrument, whether administered in person, by phone, or online.
Questionnaires are very flexible—there are many ways to ask questions. However, they must
be developed carefully and tested before they can be used on a large scale. A carelessly
prepared questionnaire usually contains several errors. Although questionnaires are the
most common research instrument, mechanical instruments also are used. Two mechanical
instruments that may be used are people meters and supermarket scanners,

Step 3 Implementing the Research Plan

The researcher next puts the marketing research plan into action. This involves collecting,
processing, and analyzing the information. Data collection can be carried out by the
company's marketing research staff or by outside firms. The company keeps more control
over the collection process and data quality by using its own staff. However, outside firms
that specialize in data collection often can do the job more quickly and at a lower cost. The
data collection phase of the marketing research process is generally the most expensive and
the most subject to error. The researcher should watch fieldwork closely to make sure that

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the plan is implemented correctly and to guard against problems with contacting
respondents, with respondents who refuse to cooperate or who give biased or dishonest
answers, and with interviewers who make mistakes or take shortcuts.

Step 4 Interpreting and Reporting the Findings

The final step in the marketing research process is interpreting and reporting the
findings. The researcher must now interpret the findings, draw conclusions, and report
them to management. The researchers should keep from overwhelming managers with
numbers and fancy statistical techniques. Rather researchers should present important
findings that are useful in the major decisions faced by management. Interpretation should
not be left only to researchers. Marketing managers will also have important insights into
the problems. The best research is meaningless if the manager blindly accepts wrong
interpretations from the researcher.

In many cases, findings can be interpreted in different ways, and discussions between
researchers and managers will help point to the best interpretations. The manager will also
want to check that the research project was carried out properly and that all the necessary
analysis was completed. Or, after seeing the findings, the manager may have additional
questions that can be answered through further sifting of the data. Finally, the manager is
the one who ultimately must decide what action the research suggests. The researchers may
even make the data directly available to marketing managers so that they can perform new
analyses and test new relationships on their own.

Similarly, managers may be biased—they might tend to accept research results that show
what they expected and to reject those that they did not expect or hope for. Thus, managers
and researchers must work together closely when interpreting research results, and both
must share responsibility for the research process and resulting decisions.

All organizations need to understand the major public policy and ethical issues surrounding
marketing research.

b. Uses and Application of Research in Marketing:

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Decision-making is crucial process in all types of the organization. This decision-making
requires then information that is collected and acquired through the marketing research
process. This information can be regarding customers companies or competitor or the other
environmental factors. Major uses of the marketing research in the organizations are as
following:

 Measurement of market potential.

 Analysis of market share.

 Determination of market characteristics

 Sales analysis.

 Product testing.

 Forecasting.

 Studies of business trends

 Studies of competitors' products.

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