PRINCIPLES OF MARKETING

Understanding Marketing
Definitions of marketing:
1) American marketing Association: Marketing refers to the performance of
business activities that direct the flow of goods and services from the producers to
the consumers.
2)

Stanton: Marketing comprises a system of business activities designed to plan,

price, promote and distribute wants satisfying products and services to present and
potential consumer segments.

3) Philip Kotler and Gary Armstrong: Marketing is a social and managerial

process by which individuals and groups obtain what they need and want though
creating and exchanging products and value with others.
Important elements
-

Business activity

Distribution of products and service

Exchange of products and services with something of value

Satisfaction of consumers and wants

Two actors i.e producer and consumer or seller buyer

Pricing, promotion and distribution of products

Development of products and services

Core Marketing Concepts

1. Needs
Human needs are a state of felt deprivation. It includes physical need for food, clothing,
warmth and safety, social needs or belonging and affection.
Human needs are a state of felt deprivation. It includes physical need for food, clothing,
warmth and safety, social needs or belonging and affection.
Esteem needs for recognition status and achievement.
Individual needs for knowledge and self-expression

Human needs are not invented by marketers but they are basic parts of human beings.
2. Want(s)
Are the forms taken by human needs as they are shaped by culture and individual
personality. Wants are described in terms of objects that satisfy human needs. Wants are
individual but resources are limited..
3. Demand Are human wants backed by buying power.
4. Products.
People satisfy their needs and wants with product. A product is anything that can be
offered to a market for attention, acquisition, use or consumption that might satisfy a
want or a need. A product include physical object services, persons, place, organization
and ideas.
5. Customer value
Is described as what the products or the service offer in comparison with the price.
Customer value can be expressed as:
CV = Benefits of the product
Price
CV is perceived value
6. Customer satisfaction. Is the extent to which product perceived performance matches
buyers expectation. If product performance is below the expectation buyer is dissatisfied.
If it matches or exceeds expectation the buyer is satisfied or delighted.
7. Exchange.

Is the act of obtaining a desired object

from someone by offering

something value in return. For exchange to take place

several condition must be

satisfied.
(i)

Two parties must participate

(ii)

Each party must want to deal with the other party

(iii)

Each party must have something to offer of value to the other

(iv)

Each party must be free to accept or reject the others offer

(v)

Each party must be able to communicate and deliver the offer

8. Market. Originally the term market stood for the place where buyers and sellers
gathered to exchange their goods. However, today the term market refers to all sets of
actual and potential buyers of a product or service. These buyers share a particular need
or want that can be satisfied through exchange.
The interaction between the sellers and the buyers. This interactions brings about what is
referred to as a simple marketing system.

Industry
collection of
sellers

Product/service
Money

Market
collection of
buyers

Feedback (information

Marketing management philosophies marketing management philosophies guide

organizations in carrying out their marketing work.
1. The production concepts
Is the oldest philosophy guiding sellers or market. It holds that consumers will favour
those product that are widely available and low in cost. Manger of production oriented
organization concentrate

on achieving high production levels and wide distribution

coverage. Production philosophy hold good in atleast two situations.

a) Where the demand for a product exceed supply
b) Where the product cost is high and has to be brought down through increased
production.

2. The product concept

This concept hold that consumers will favour those products that offer the highest quality
performance and features. Managers in production oriented organizations focus their
energy on making high quality products and improving them over time. The mangers
assume that buyers admire well made products and are wishing to pay more for the
product.
3. The Selling concept
Holds that consumers if left alone will ordinarily not buy enough of the organization
products. The companies guided by this philosophy undertake aggressive selling and
promotion effort. This concept assume that consumers typically show buying resistance
and need to be persuaded into buying more. This concept is practiced more aggressively
with unsought goods that buyers normally do not think of buying e.g insurance
companies. Selling concept assumes that customers who are persuaded into buying the
product would like it and if they dont they will not tell others about it. The customer
would forget about the bad experience and buy it again e.g materials industry.
4. The marketing concept
Marketing concept tend to challenge the previous three concepts. It holds that the key to
achieving organizational goals consist of determining the needs and wants of target
market and delivering the desired satisfaction more efficiently and effectively than
competitors do.
This concept rest on four pillars / elements
a) market focus
b) customer orientation
c) coordinated marketing
d) profitability
a) Marketing focus: involves focusing on specific market has no company can
operate in every market and satisfy every need. In other words it means
determining the market that the company wants to save or to exploit.

b) Customer orientation: means defining customer needs from customer point of

view not from the company point of view and then deep products that will satisfy
those needs.
c) Marketing orientation. Means defining customer needs from customer point of
view not from the company point of view and then develop products that will
satisfy those needs.
d) Profitability: the purpose of the marketing concept is to help organization achieve
their goals/objectives and one of the objectives is to achieve profit and therefore
marketers guided by this concept concentrate on doing the job need through
identification of customers needs and customer satisfaction in order to achieve
profit or to meet the profit goal.
5. Societal marketing concept; Holds that the organization task is to determine the
needs, wants and interest of the target market. And to deliver the desired satisfaction on
more efficiently and effectively manner than competitive in a way that preserves and
enhances the consumers and the societies well being. It calls upon marketers to balance
three considerations namely:
a) company profit
a) customer satisfaction and
b) public interest on societal welfare
Marketing challenges facing marketing today
-

Increased competition

Changing economic environment

Marketing by non-governmental originations

Globalization

Technological advances

Better informed consumers

Consumers concerns for the environment

Political uncertainties

Conventional marketing is out and environmental /green marketing is in i.e

recycling.

Marketing research and information systems

Introduction. Marketing decisions are made under conditions of uncertinaity and risk.
Marketing research is to reduce risk that provide information about the factors involved
possible outcome of particular action. To reduce risk in decisions making management
needs accurate and relevant in information. It is therefore the role of marketing research
to provide this information.
1. Marketing research
Definition: According to chartered institute of marketing. Marketing research is the
objective, gathering, recording and analyzing of all facts about problem relating to the
transfer and sales of goods and services from the producer to the consumer.
Kotler and Armstrong. According to Kotler and Armstrong marketing research is the
systematic design, collection, analysis and reporting data relevant to specific marketing
situation facing an organization.
2. Marketing information system (MIS0. * of people equipment and procedures to gather,
soft, analyze, evaluate and distribute needed timely and accurate information to
marketing decision makers. Kotler and Armstrong. Chattered institute of marketing:
marketing information system represents a systematic attempt supply continuously useful
marketing information within an organization to decision makers.
3. Marketing intelligence: it represents everyday information about development in the
marketing environment that help mangers prepare and adjust marketing plans. Marketing
intelligence system gather, analyses and distribute information about the companies
competitive, technological, economic, social and political environment.
Technique of acquiring marketing information system (intelligence)
(i)

Paying competitors employee in order to get MIS of other companies.

(ii)

Organize for job interviews when vacancies do not exist

(iii)

They buy or collect competitors garbage

(iv)

They buy competitors product break to component and analyze the product in
terms of its ingredient

(v)

Reading about the companies in a specific industry from secondary sources

e.g newspaper, business publication and companies magazines

(vi)

Through observation

Market research
Market research is one of the activities that falls with marketing research definition it has
a narrow focus.
Market research involves gather information about the market for a particular product or
service.
Types of marketing research
A marketer can undertake
(i)

Product research: Customer acceptance of proposed new product. Comparative

studies between competitive products. Studies into designing and packaging a
product. Research into new product development.

(ii)

Market research: examples are

-

analyses of the market potential for the existing product.

analysis of the characteristic of the market

analysis of the market share

(iii)

price research examples are:

-

analysis of elasticity of demand

the effect changes in credit policy on demand

customer perception of price

(iv)

Promotion research. Example are:

-

a study on motivation research for advertising and sales promotion effectiveness

analyzing the effectiveness of advertising on sales demand

analysis on the effectiveness of the salesmen

(v)

Distribution research. Examples

-

The location and deigns of distribution

The study of the cost of different methods of transfer and warehousing

Effectiveness of distribution channels

Marketing research involves the following steps

1. The marketing problem which marketers faces must be properly defined. This is
usually done through consultation between marketers and researchers.
2. deigning the research. Once the research team knows what is the problem it must
be able to resolve the design the research. It involves establishing type of data to
be collected whether primary or secondary data. It also involves deigning a form
data collection method to be used e.g questionnaire, observation, telephone and it
also involves election of a research firm/agency where necessary
3. Selection of the sample.
It is not always necessary but it becomes necessary in a situation where the
population is very large, where there is time constraint and the finding are needed
urgently.
-

resources limitation

where population of study is sparsely distributed

research on the population is sometime not feasible especially when the

population is large for practicality and cost effectiveness therefore a sample is
selected.

A sample is define as a segment of the population selected for marketing research

to represent the population as a whole.

A sample must be representative of the population of which it is chosen or

selected

Ti should also be of sufficient size and selected using probability method where
possible.

The term population here mans those who meet the criteria chosen for marketing
research. Therefore it does not mean everyone living in a country or town.

Example of population under study could be teenagers, comer undergraduate

students, businessman etc
Methods of selecting or choosing sample
this method are categorized into two:
1. Probability method
2. non-probability method
1. Probability methods: there are several methods which the researcher can use.
a) simple random sampling. Every member of a population has known and equal
chance of selection.
b) Stratified random sampling: in this case the population is divided into groups
according to some common attributes or characteristics such as age, sex etc and
then random sample are drawn from each group.
c) Area sampling method: it involves two stages
a. Selecting a probability sample of geographical area s
b. Selecting units or individuals within the selected geographical areas
2. Non probability method
a. Convenience sampling method: The researcher selects the easiest population
members from which to obtain the information. The researcher uses his/her
judgment to select population member who are good prospect for accurate
information.
Disadvantages
The information collected may not be represented on the entire population on
their views, opinions
b. Judgment sampling method: the researcher
number of people in categories.
Potential faults in a sampling exercise

finds an interview a prescribed

1. Bias: a bias sample may occur when a sampling is out of date and excludes *
need in the population or when some individuals is selected decline to response.
2. insufficient data: this fault occur when a sample is too small to be reliable as a
source of information about an entire population.
3. Hawthorne effect:
4. Omission of an important factor. Data collected from a sample may be incomplete
due to omission of a question in the questionnaire.
5. misinterpretation of data: it is common when opera headed questionnaires are
used, since the response are more than one word there may be difficulty in
interpreting the results correctly.
4. Collection of the data
Marketing research information is composed of primary data and secondary data
Primary data: is collected specifically for the purpose of marketing research or for the
problem at hand.
Secondary Data: is information that already exist somewhere having been collected for
another purpose.
For secondary data to be useful the research must ensure that the data is relevant,
accurate, recent and reliable.
Various methods of collecting primary data
(i)

Observation method

(ii)

Questionnaire method

(iii) Consumer panels

(iv) Trade audits. Such as wholesale and or entail audits.
(i)

Observation method: observing may involve use of machine or field worker,

recording behaviour or require the field worker to interpret behaviour.

(ii)

Questionnaire method: A questionnaire can be administered through personal

interview, telephone or through post

Consideration in designing questionnaire

(i)

Questions must be understandable

(ii)

Question should be designed with subsequent data analysis in mind

(iii)

Questionnaire should be short and clear

(iv)

The working language or the target group should be used

(v)

Questions should follow a logical sequence

(vi)

Personal questions should only be asked in exception circumstances.

Methods of administering questionnaire

1. Telephone interviews
Pros.
a) They offer speedy responds
b) They are cheap
c) They can cover a wide geographical area
Cons
a) interviewer must be fairly short
b) it cannot be used in visual method
(ii) Personal interviews
Pros
a) Better results are achieved and divided to specialist population
Cons
a) Respondent may not understand the question
b) There is low responds rate
c) There is a likelihood of unrepresentative respondents
(iii) consumer panels
It is a representation of consumers who have agreed to keep information about their
attitude or buying habits.
(iv) Retail/wholesale audit

They are carried out among panel of wholesalers and retailers, a research firm sends
auditors to selected outlets at regular interval to counts stocks and delivers thus enabling
an estimate output to be made.
5. Analysis of the data and interpretation of the results
The analysis or evaluation of the data collected is carried out using statistical techniques
such as multiple-regression analysis, factor reanalysis, discriminant analysis etc.
6. Presentation of the report or report writing
This is the final step of the marketing research process the report should be written in
understandable and simple language for a providing adequate explanation. This will make
it easier for decision makers to apply the findings and diminishes the likelihood that a
report would be misused or ignored entirely. Elements of a report reporting writing
Kibera and Waruingi.
MARKETING SEGMENTATION
1. Marketing segmentation: is dividing a market into different distinct groups of buyers
with different needs, characteristics or behaviour who may require separate products or
marketing mix.
Marketers undertake marketing segments because they may not have the resources
required to serve the entire markets.
The basis for segmentations consumer market
A marketer must understand the different segmentation variables that might be used to
segment a consumer market.
The major segmentation variables are :
(i)

Geographical factors

(ii)

Demographic factors

(iii)

Psychographic factors

(i) Geographical factors

Dividing a market into different geographical units such as nation, state, provinces, cities,
locations, districts, residential areas etc means that the company must use geographical
basis /variables to segment markets. The rationale of dividing the market in the bases of
geography is that people from one regions have almost similar behaviour in terms
consumption patterns and usage of the product. E.g some behaviours are similar to
consumption i.e Germania drink more bear per capital than any other field and station
consuming more wine and Americans coffee.
2. Demographic factors
It is commonly used for dividing the market and it involves dividing the market into
groups based on variables such as age, gender ,family size, family lifestyle, income,
occupation, education, religion, race and nationality.
Consumer need and wants vary closely with demographic variables.
Demographic variables also are easier to ensure than most other types of variables.
Aspects of demographics
Gender: it is a part of demographic segment. It involves * a market into different groups
based on sea. It used clothing, cosmetics, magazines.
Education: Better educated consumers demand high quality in both goods and services.
Product market segmented by education include; Radio and TV programmes, books and
magazines.
Income: many companies target high income consumption with luxury goods and
convenient services. Other targets middle class and still others target low income class.
Income segmentation is used by marketers of automobile clothings, cosmetics and travel
industry.
Occupation rate nationally, religion and ethnic.

2. Psychographic factors

Psychographic segmentations involves dividing a market into different groups based on

social class, life style or personality characteristics.
Social class: Many companies design products or services for specific social classes
building in features that appeal to these classes. Individual consumers in a specific social
class usually have similar preference of cars, clothes, home furnishing, leisure activities,
reading habits etc
Personality marketers used personality variables to segment their market by giving their
product personalities that correspond to consumer personalities. Successful market
segmentation based on personality has been used for product such as cosmetic, cigarette,
bar etc
Requirements for effective segmentation
For a market segment to be useful it must have the following characteristics
1.

Measurability: Marketers must be able to identify consumer who are members of a

particular market segment. In this connection they should identify characteristics
that include or exclude a consumer from a market segment. This chrematistics must
be measurable.

2.

Accessibility. The market segment identified must be effectively reach and served
through communication and transportation. Such must segment cannot be accesses
or unreachable.

3.

Substantial. The market segment should be large and profitable enough to be

served.

4.

market responsive: consumers in a given market segment should be responsible to

the marketing programme design for them and unless this market segment are
wiling to react to the marketing program develop, then there is little reason to
develop a unique marketing programme for each market segment.

2. Marketing Targeting

This is the process of evaluating each market segment attractiveness and selecting one
or more segments to enter.
(i) The factors used to evaluate market segments attractiveness
1. Segment size and growth
Markets collect and analyze data on current segments sales, growth rate and expected
profitability. Large companies may choose to target those segment with large current
sales, high growth rate and high profit margin. Small companies on the other hand target
segment that are smaller unless attractive but are potentially profitable for them.
2. Segment structural attractiveness
It can be established by evaluating factors such as
(i)

competitors that already in the market segment

(ii)

available substitute product

(iii)

relative power of buyers

3. Company objectives and resources

The company must consider its own objectives and resources in relation to market
segment evaluation. A company may dismiss attractive segment because they do not
confront with their objectives.
A company may also dismiss a market segment because it does not have the required
skills and resources needs to succeed in that market segment.
(ii) Selecting market segment
It refers to a target market selection
(ii) A target market consist of a set of buyers which have common needs or consideration
that the company decoded to serve.

Alternative market coverage strategies which can be used by the companies once the
target market has been selected.
1. Undifferentiated marketing strategy
This strategy ignores the market segment difference and goes after the whole market with
one product or service. It is also refer to as mass marketing.
The company which used this strategy designed a product a marketing need that appeal to
the largest number of buyers. This company rely on mass distribution, mass production,
mass advertising etc
This strategy offer the following advantages
(i)

Low production and transpiration cost due to economies of scale

(ii)

Low advertising costs and low marketing research costs.

Disadvantages
(i)

it is difficult to develop a product that will satisfy all consumers

(ii)

large market segments may be less profitable because they attract a lot of
competition.

2. Differentiated marketing strategy

When a company used this strategy it targets several market segments and design
separate products for each segment.
Differentiated marketing strategy creates mode of the sales compared to a
undifferentiated marketing. However, it increases cost of doing business. For example to
modified a product to meet different market segment needs will involve extra research
hand development costs. A company before adopting this strategy must weigh increased
sales against increased costs. Example are Coca cola products and toilet soaps companies.
3. Concentrated marketing strategy
This is whereby a firm or company goes after a single marketing segment or a few
market segments.

The strategy is appealing to companies with limited resources e.g Johnson and Johnson
Co. limited which concentrated only on the children market.
Advantages
Companies which used this strategy achieve strong market possession because of its
greater knowledge of the segment needs and special reputation that it acquired.
Disadvantages
Conceptual marking strategy involves higher than normal risk because large competitors
may differ to enter the same segment, for this reason many companies prefer to diversify
in several market segment.
Factors to be considered when choosing a market coverage strategy
1.

Cost benefit analysis

2.

size of the market - target market

3.

the market distribution where the consumers are located

i.e scattered

4.

Company resources: e.g concentrated marketing strategy is

best when a firm has limited resources.

5.

Degree of product variability. For instance indifferent

market is more suitable for uniform product like salt, mineral water, grape fruits
and steel.
if product that can vary design are more suited to differentiated and concentrated
strategy e.g mobile phones cars, electronic goods, kitchen appliances etc.

6.

The products stage in the life cycle. It is described in terms

of the following stages:
-

introduction stage markets are likely to go the undifferentiated marketing

growth stage differentiated strategy appropriate for the products at the maturity
stage

decline stage markets withdraws some differentiated products from some

markets, hence company are likely to go to concentrated markets due to poor
health of the product in terms of profitability sales.
Profitability, sales growth and competition

7.

Market variability. If most buyers have the same taste, buy

the same amount and react the same way to marketing effort than undifferentiated is
more appropriate. If most buyers have different taste, preference, buy different and
react in different ways to marketing effort, hence differentiated marketing study
more appropriate.

8.

Competitors marketing strategies

- Market segmentation
- Targeting marketing

3. Market positioning
Market positioning: is arranging for a product to occupy a clear, distinctive and
desirable place in relation to competing products in the minds of the target consumers.
Product positioning: is the way the product is defined by consumers on the important
attributes or the place the product occupy n consumes mind relative to competitors
products.
How companys can position their products
Positioning strategies on basis of the following
1. Specific product attributes basis: examples of product attribute are economy,
performance, safety, durability etc
2. Benefits they offer business example of product are tooth paste. Example of
benefit consumer get from using tooth paste include no Colgate cavities, good
taste, fresh breath etc
3. usage occasion positioning strategy. There is positing a product on the basis of
occasion is used e.g beer during celebrations.
4. Positioning product from competitors. Though product may be similar to a
competitors a marketer may choose to differentiate it. E.g 7 up is unticoke.

5. Positioning product against competitors e.g Safaricoms campaign on cell phone

to be the better option
6. Classes of users positioning strategy: products positioning according to social
classes, life styles and personalities.
Choosing and implementing of a positioning strategy
How does marketer choose and implement positioning strategies?
This task involves three steps:
1. Identifying possible competitive advantage
2. Selecting the right competitive advantages
3. Community and delivering the chosen position
1. Identifying possible competitive advantage
Consumers typically choose products and service that give them the greatest value. Thus,
the key to wining and keeping customer is to understand their needs and buying processes
better than competitors do and to deliver more value.
If a company position its product as offering the quality and service, it must then deliver
the promised quality and service. Thus, positioning beginning with actually
differentiating the companies marketing offer so it will give consumers more value than
competitors offer do.
A company or market offer can be differentiated along the lines of products, services,
personnel or image.
a) Product differentiation. A company can differentiate as physical product. Some
companies offer highly standardized products that allow

little variation e.g

aspirin, steel. Other companies offer products that can be highly differentiated
such as automobile, furniture, hence a company face an abundance of design
parameters. It can offer a variety of standard or optimal features not provided by
competitors e.g Volvo provides new and better safety features etc. Style and
design can be also important differentiating factors. Company can differentiate

their products on such attributes s consistency, durability, reliability and

repairably.
b) Service differentiation. Some companies gain competitive advantage through
speedy, convenient or careful delivery e.g a bank has opened full service branches
in supermarket to provide location. Convince along with Saturday, Sunday and
week every hour. Installation also can differentiae one company from anther e.g
IMBM is known for its quality installation service. It deliver all pieces of
purchased equipment to the site at one time rather than * individual components
to sit and wait for others to arrive. Also some company differentiate their offer by
providing customers training services.
Consumer behaviour
Definition
Consumer behaviour is that behaviour exhibited by people in planning, purchasing and
using economic goods and services. By Kibera and Waruingi.
Definition:
Consumer behaviour are those action directly involved in obtaining, consuming and
disposing of products and services including the decision processes that precede and
follow this actions.
By Engel, Blackwel and Miniard.
It takes about individuals, households who buy products/services for personal
consumption.
Factors /characteristics influencing or affecting consumer behaviour
Model of consumer behaviour it is also refer to as stimulus response

theory of

consumer behaviour.
This model of consumer behaviour focuses on the question how do consumer respond to
various marketing stimulus that the company might use.

Stimulus response model

Marketing
stimuli

Other stimuli

Buyers black box

Buyers responses

Product
price place
promotion

Economic
factors
Technological
Political /legal
Socio-cultural
Demographic etc

Buyers
characteris
tics

Product choice
Brand choice
Dealers choice
Purchasers timing
choice
Purchase amount

Buyer
decision
process

Buyers characteristics affecting consumer behaviour

1.

Social class

2.

Culture

3.

Reference groups/membership groups

4.

Family

5.

Age and life cycle stage

6.

Occupation

7.

Income

8.

Personality and self concept

9.

Attitude

10.

Beliefs

11.

Motivations

12.

Perceptive

1. Culture culture is the most basic cause of a person wants and behaviour.
Culture is define as a set of basic values, perception, wants, beliefs and behaviour
learned by a member of society or family and other important institution.
2. Family: Family members can strongly influence buyer behaviour. The buyers
parents and nuclear family.

Decision making unit (family)

Members of this family may have different consumer buying roles
(i)

Initiator a person who initials the buying of the products

(ii)

Influence a person whose views influence the buying of a product

(iii)

Decider a person who makes decision either to buyer not to buy the product

(iv)

Buyer persons who makes a final decision to buy a product

(v)

User The final consumer or user of the purchased product

3. Life style - is a person pattern of living as expressed in his/her activities interest

and opinions.
Lifestyle classification (American example)
1. Actualizers: These are those people with highest income image is important to
them, they are open to change and they tend to buy finer things in life.
2. fulfilled: they are usually mature, responsible, well educated personnel, well
informed and opened to new ideas and also they have high income, but more
practical.
3. Believers: they are conservative, they have modest income, they favour
indigenous product with established brands. They concentrate more on the family,
church, community and the nation.
4. Achievers: these are successful work oriented people who get satisfaction of job
and their family. They prefer established products and services.
5. Stringers: they are more or less * to achievement, but they have fewer economic,
socio-psychological resources style is entirely important to them. They strive to
emulate consumers in other more resourceful group.
6. Experiences : they spend heartily on clothes, fast food and music and other
youthful favourites. They specially use new things.
7. makers: they value self-sufficiency and focuses on family work and physical in
creation. They arent influence by materials possession other than clothes with
practical purpose.

8. strugglers: they are people with lowest income and too few sources. They tend to
be brand loyal consumers.
4. Personality and self concepts: personality is defined as a persons unique
psychological characteristics that lead to relatively consistent and lasting
responses on his/her own environments. Personality is usually described on suck
traits as aggressive, social, emotional, creative, defensive, dominating e.g coffee
makers associates high coffee consumption with sociability.
The buyers decision process
The buyers decision process is a model or theory that explain that buying start long
before actual purchase and continues long after.
It is explained in terms of five stages. Namely
a) Problem recognition
b) Information search
c) Evaluation of alternatives
d) Purchase decision
e) Post purchase behaviour

Problem
recognition

Information
search

Evaluation of
alternatives

Purchase
decision

Post Purchase
behaviour

This process encourages the marketer to focus on the entire buying process rather than
the purchase decision. The model seems to imply that consumer pas through all the five
stages with every purchase. However, in case of routine purchases, consumers keep some
of these stages.
Types of buying behaviour
1.

Complex buying behaviour - buying of expensive products, durable, risk

indemnity

2.

Habitual buying behaviour HBB

3.

Dissonance reducing buying behaviour

4.

Variety seeking buying behaviour

1. Complex buying behaviour involves buying of expensive products

-

durable products

making risky decisions

high consumer involvement

significant brand difference

product are infrequently bought

The consumer is likely to follow all the five consumer behaviour stages e.g buying of
automobile, car and other machinery products
2.

habitual buying behaviour. Consumer are likely to behaviour when products are
purchased or bought frequently.
-

The purchase is routine in nature

The products are cheap

There is low involvement of consumers

Brand differences are insignificant

Hence consumer might skip some consumer between stages e.g purchase of
household goods like bread, ea, sugar and salt etc

3.

Dissonance reducing buying behaviour consumer et c highly involved in the

purchase
-

products are expensive

the products are bought infrequently

brands are almost similar

the consumer is likely to be attracted by price deal /convenience due to

similar brands e.g carpets, wedding rings

4. Variety seeking buying behaviour- consumers undertake variety seeking behaviour

in situation characteristics by low consumer involvement, but significant perceived
brand differences. In this case consumer do a lot of brand switching, but they do it

for the sake of variety rather than because of dissatisfaction. Examples of products
are : biscuits, yoghurt.
Product decisions
Marketing mix variables
Ingredients
Product, price, place and promotion which the marketing manager must come up or blend
to suit the target market. A company can have several combinations of the marketing mix
depending o n the number of target market being exploited.
The four marketing mix variables are referred to as controllable factors.
These variables can be change by the marketing according to the changes in the
environment.
The way the variables are mixed may be determined by the

success or failure of the

company or the marketer.

Product decisions
Those unfamiliar with marketing probably think of a product as a physical object,
however, in marketing the term product must be understood in a broader sense. The term
product include physical, object, services, persons, organizations, place and ideas.
Definition:
A product is something hat satisfies a set of wants that customers have by (Chartered
Institute of Marketing)
Definition: A product is anything hat can be offered to the market for attention,
acquisition or purchase, use or consumption that might satisfied a need or a want. By
(Kotler and Armstrong).
NB: though the term product include service, it is important to note that services have
unique characteristics from physical objects.

Unique characteristics of services

1. Intangible
2. Not quantifiable. However, it can be quantify using effort, time
3. A service is highly perishable i.e time cost and death of providers of service
4. inseparability: services cannot be separated from the provider
5. Heterogeneity (highly) i.e the standard or quality of service will vary with each
delivery
6. lack of ownership. Service purchased does not transfer ownership of property
Product classification
Product are classified into two main categories
1. Consumer goods
2. Industrial goods
1. Consumer goods. There are sold directly to the person who will ultimately use them.
2. Industrial goods are used in the production of other products or to conduct
businesses.
1. Consumer goods: are further classified into

(i)

(i)

Convenience goods

(ii)

Shopping goods

(iii)

Specialty goods

(iv)

Unsought goods

Convenience goods: are the consumer goods bought frequently, immediately and
with minimum comparison and buying effort. These government are usually low
in price distributed widely and mass promoted e.g sugar, bread, milk, tissue paper,
toilet soap etc. consumer are likely to exhibit established buying behaviour.

(ii)

Shopping goods are more durable. This type of goods are usually bought after
long planning and shopping allow. This type of purchase are also less frequent
and before purchase customers compare the various brands, quality, style and

prices they are highly priced and they are distributed selecting in fewer outlet,
they are promoted through advertising and personal selling examples are TV
sets, weighing machines, refrigerators, cookers, cars
They are also referred to as whites appliances. Consumers are likely to exhibit
complex buying behaviour.
(iii)

Specialty goods. They have unique characteristic or brand identification of which

a group of buyers are willing to make a special purchase effort. Customers or
buyers show strong brand preferences and loyalty. They make special buying
effort, little comparison of brands and they arent sensitive to price. Specialty
goods are usually high in price, distributed exclusively, promoted carefully to a
target market. Examples are jewellery, labeled clothes (designer cloth).

(iv)

Unsought goods: these are goods that the consumer do not know about or know
about but does not normally think of buying. Consumer has mutual product
awareness and knowledge and there products, or goods and if they are aware they
have little or negative interest. The power i.e low or high. The distribution also
varies, they may be distributed intensively or selectively or exclusively. In relative
to promotion they require aggressive promotion more so aggressive personal
selling. Examples: new products, life insurance.

2. Industrial goods: these are classified into

(i)

(i)

Materials and parts

(ii)

Capital items

(iii)

Supplies and services

Materials and parts include raw material, manufactured material and parts. Raw
materials consist of farm products, and natural products. Manufactured materials
and parts consists of component materials and component pats.

(ii)

Capital items : they include installations and accessories. They aid in production
or operations. Installations includes buildings, factories, offices, generator,
elevations. Accessories include office equipment e.g tax machine, firm stocks,
computer, photocopies.

(iii)

Supplies and services:

they include office stationery and cleaning material,

services include, maintenance and repair services

Individual product decision
Development and marketing of individual products and services involves making the
following decisions:
1. Product benefit and attributes
2. Branding
3. Packaging
4. Labeling
5. Product support services (after sales service or augmented products)
Product life cycle (PLC)
***
Product lifecycle has an almolybiological basis
The products are born or introduction, growth, maturity, old age and decline. It involves
five distinct stages
1. Product development
2. Introduction
3. Growth
4. Maturity
5. Decline stage
However, many authors and scholars give more emphasis to four stages.
1. Product development. It focuses on the new product development
2. Introduction stage. Characteristics of introduction stage
-

The products takes time to be accepted in market therefore sales are low

There are few firms in the market selling the same product

Cost of producing the product is high because of low output

Profits are negative due to low sales and product developments expenses

The company/marketer focus on creating product awareness and trial as the

market objective

The company offer one version of the product

The prices are usually very high

The products is distributed selectively using few outlets

Promotion is aimed at building products awareness among innovators, deals

and early adaptors.

Consumer classification in terms of time they take to adopt a new product

1. Innovators. They form 2.5% of the market population
2. Early adopters. They are usually 13.5% of the market population
3. Early majority. They are usually 34% of the market population
4. Late majority. They are usually 34% of the market population
5. Laggards. They compute 16% of the market population.
Come up with a list of 5 products in the introduction stage of product life cycle.
2. Growth stage
A product move to growth stage. A g* market acceptance through introduction stage.
Characteristics

Sales starts rising rapidly.

The company starts making profits

The unit cost of production falls with rise in production and consumption

The early adaptors: continue buying the product

Competitors start increasing o n number

The company main objective is to maximize market share

The company or marketing offer product extension or varieties

Price to remain static for a time and they aimed at penetrating the market

The market start using intensive distribution

The promotion building awareness and interest in the market

Advertising is the strongest method of promotion during this stage

Manufacturers spend a lot of money on product improvement promotion and

distribution to obtain a strong position in the market e.g market leader position

Competition is high during this stage because many firms want to benefit from
profit or increasing sales and high demand

Promoting products
Promotion mix; it is the specific mix of advertising, personal selling, sales promotion and
public relations a company uses to purse its advertising and marketing objectives.
There are four major promotion tools
1. Advertising: it is any paid form of non personal penetration and promotion of ideas,
goods or services by an identified sponsor
2. Personal selling: personal presentation by the firms sale for the purpose of making
sales and building customer relationship
3. Sales promotion short term incentives to encourage the purchase or sale of a
product or service.
4. Public relation: building good relations with the company e.g various publics by
obtaining favourable publicity, building up a good corporate image and handling or
heading off unfavourable rumours, stories and events .
Advertising includes: printing, broadcasting, outdoor and other forms of
Personal selling includes: sales presentation, trade shows and incentive programs . sales
promotion includes point of purchase displays, premium, coupons, specially advertising
and demonstrations.
Steps in developing effective communication
There are two major parties in a command the sender and the receiver
Steps are as follows:
1. Sender the party sending the message to another party

2. encoding the process of putting thought into symbolic form

3. message the set of symbols that the sender transits
4. media the communication which the message moves from sender to
receiver e.g TV sets, radio
5. decoding the process by which the receiver assigns meaning of the
symbols encoded by the sender .
6. receiver the party receiving the message sent by another party to the
7. response the reactions of the receiver

after being exposed to the

message
8. Feedback the part of the receiver response communicated to the sender
9. Noise the unplanned static or distortion during the communication
process which results in the receivers getting a different message than the
one the sender sent e.g poor TV reception.

Sender

Encoding

Message
media

Decoding

Noise
Feedback

Response

Elements in the consuming process

Factors to be considered in choosing effective communication
1. Identifying the target audience
2. Determining the resource sought
3. Choosing a message, control , structure, format
4. Choosing media period, non personal channels, collecting feedback
5. Select the market source
6. Collect the feedback
7. Urgency and

Receiver

8. Cost and speed

Setting the promotion mix
Promotion mix is the specific mis of auditing, personal selling, sales promotion and
public relation a company use to pursue its advertising and marketing objectives.
Company must blend the promotion tools carefully into a coordinated promotion mix.
The nature of each promotion tool.
1. Advertising
Advertising is any paid form of non personal presentation and promotion of ideas, goods
or services by an identified sponsor. Advertising is a government way to inform and
persuade, whether the purpose is to sell a product worldwide or to get consumers in
developing/developed nation to use that product. Advertising as a percentage of sales
varies greatly by industry e.g of spending is low in the auto industry but high in foods,
drugs toiletries, plays and other adverts not done by the agency.
Major decisions in advertising
Marketing management must make five important decisions when developing an
advertising programs
Developing an advertising program is to set objectives. The objectives should be based
on past decisions about the target market, positioning and marketing mix. The marketing
position and mix strategy define the job that adverting must do in the total marketing
programme.
(a) Possible advertising objectives are:
To inform, to persuade and to remind customer about products/services being advertised.
Advertising objective is a specific communication tasks to be accomplish with a specific
target audience during a specific period of time.
Informative advertising: it is advertising used to inform consumer about a new product
or feature and to build primary demand.

Persuasive advertising: advertising used to build selective demand for a brand by

persuading consumers that it offers its best quality for their money.
Comparison advertising: Advertising that compares are brand directly or indirectly to one
or more other brands.
Reminder advertising is important for mature products to helps consumers, thinking
about the product.
b) Setting the advertising budget
This is the second step. The role of advertising is to affect demand for a product. The
company wants to spend the amount needed to achieve the sales goal.
Specific factors that should be considered when setting the advertising budget
(i)

Stage in the product life cycle. New products typically need large advertising
budgets to build awareness and to gain consumer trial. Mature brands usually
require lower budgets as a Ratio to sale.

(ii)

Market share. High market share brands usually need more * spending as a
percentage of sales than low share *.

(iii)

Competition and cluster. In a market with many competitor sand high advertising
spending, a brand must advertise more heavily to be heard above the noise in the
market

(iv)

Advertising frequency. When many repetitions are needed to present the brands
message to consumers, the advertising budget must be large

(v)

Product differentiation. A brand that closely resembles other brands in its product
class (bear, soft rinks, lamb detergents) requires heavy advertising to set it apart.

c) Advertising strategy
It consists of two major elements creating advertising messages and selecting
advertising media.
Creating advertising messages i.e the exchanging message environment.

Todays messages must be planned

more imaginative, more entertaining and more

rewarding to consumers, creative strategy therefore will play an increasingly important

role in advertising success.
Message strategy. Creative concept may emerge as a visualization, a phase or a
combination of the two.
Message execution: any message can be executed in different styles., slice of life, life
style, pantasy, mood or image, musical, personality symbol, technical expertise, scientific
evidences and testimonial evidence. The advertiser must also choose a tone.
e.g message theme

creative copy

7 up is not a cola

the uncola

A BMW is a well engaged automobile

The ultimate driving machine

Tusker my beer, my cumb

makes us equal, as no equal

Hanes socks last longer than less expected

buy cheap socks and un* pay though the

foes

d. Selecting adverts media

1. Deciding on reach, frequency and impact
2. Choosing among major media types e.g TV set, radio, newspaper
3. Selecting specific media vehicles e.g ratio programs, specific management, road
4. deciding on media timing i.e morning, road, afternoon or evening.
Advertising evaluation
Evaluate both communication effects and sales effect of advertising regularly
2. Sales promotion
Sales promotion short term incentives to encourage purchase or sales of a product or
service.
Sales promotion: includes a wide variety of promotion tools designed to stimulate earlier
or stronger market response.

It includes consumer promotion samples, coupons, rebates price off premiums, contests
etc
Trade promotions buying allowances, freed goods, merchandize allowances,
cooperative advertising, push money, dealer sales
Sales force promotion bonus, contest, sales rallies etc.
It is designed to motivate the sales force and make sales force selling efforts more
effective.
Sales promotion are used by many organs such as manufacturer, distributors, retailers,
trade association and non profit organizations.
Setting sales-promotion objectives
Sales promotion objectives vary widely: consumer promotions, trade promotions,
consumer relationships building.
Thus if properly designed, every sales promotion tool has consumer relationships
building potential.
Selecting sales promotion tools.
Description of the main consumer and trade promotion tools.
Consumer promotion include the following:
Samples are offers of a trial amount of a product. Some samples are free or others, the
company changes a small amount to offset its cost.
Coupons are certificates that give buyers a saving when they purchase specified products.
Premiums are goods offered either free or at low cost as an incentive to buy a product.
Contests, sweepstakes and games give consumers the chances to * something, such as a
trips, cash or goods by luck or through extra effort.
A sweepstake calls for consumes to submit their names for a drawing.
A game presents consumers with something bingo numbers, missing letters every time
they buy which may or may not help them to win a prize.

Trade promotion
Trade promotion can persuade retailers or wholesales to carry a brand, give it shelf space,
promote it in advertising and push it to consumers.
Manufacturers normally offer allowances, discounts and free

goals to induce both

middleman and consumer to purchase their good and services in large quantities.
Discount is reduction in price on purchase during a stated period of time
Allowance: promotion money paid by manufactures to retailers in return to an agreement
to feature the manufactured products in some way.
Business promotion * e.g convention and business shows
Developing

the sales promotion programme

size of the incentive, conditions for

participation, length of promotion, evaluation, sales promotion, plays an important role in

the total promotion mix. Hence, marketing must define the sales promotion objective
select the best tools, design the sales promotion objectives programmes select the best
tools, design the seven point programme, implement the program and finally evaluate the
results.
3. Public relations (publicity)
Public relations building good relations with the company varies published by
favourable publicity, building up a good corporate

image and handling off

unfavourable rumours, stories and events. Public relations departments may perform nay
or all of the following functions:
Press relations or press agentry. Creating and placing information in the media to attract
attention to the product or service.
Product publicity. Publicizing specific products
Lobbying. Building and maintaining relations with legislators and government officials
to influence legislation and regulation.

Investors relations. Maintaining relationships with shareholders and other financial

community.
Development public relations with donors or members of NGO, non profit organization
to gain financial or volunteer support.
Public relations is used to promote products, people, places ideas and activities,
organization and even nations.
Major public relations tools
Public relations

professionals use several tools. One of the major tools is news.

Speeches, special events, written materials, audio visual materials, corporate identity
matinees and public service activities are important tool used in PR.
-

Major PR decisions

Setting PR objectives

Choosing PR message and vehicles

Implements the public in the plan

Evaluating PR relations results

Public relations results are difficult to measure because PR is used with other promotive
tools and its impact is often indirect. If PR is used before other tools come into play, its
contribution is easier to evolution. The easiest measure of publicity effectiveness is the
number of exposures in the media. PR people give the client a clipping book showing
all the media that comes news about the product.
The role of personal selling
There are many types of personal selling jobs and the role of personal selling can vary
greatly from one company to another. The nature of personal selling. The people who do
the selling go by many names: sales people, sales representative, account activities, sales
consultants, sales engines, marketing representatives etc
Sales person is an individual

action for a company by performing

activities, prospecting, communicating, servicing and marketing gathering.

the following

Merits of personal selling

1. Flexibility sales people can see their customers reaction to a particular sales approach
and make adjustments on the spot.
2. focus or pinpoint on perspective customers, thus minimizing wasted effort
3. personal selling is that its goal is to actually make a sale.
Limitations
1. High cost
2. some companies are unable to attract the quality of people next to do the job
Product decisions
3. Maturity stage
It is whereby sales growth slows down or stabilize
At this stage it is characterized by:
-

the rate of sales growth slows down and the product reaches a period of maturity

the product usually high but not increasing

competitions is intensive and weak competition have the market (weak companies
exit the market)

the early and late majority buy the product during this stages

the cost of production is lower compare to the growth stage, due to mass production
or economies of scale

the marketer objective is maximized profit while depending on the market share

the company is faced with severe competition stabilizing or delivering sales of a

capacity of excess product or excess products to be marketwise

the company look for ways of prolonging the product life by adopting the following
market strategies
(i)

Product modification strategy

(ii)

Market modification strategy

(iii)

Marketing mix modification strategy

The products are priced to match of its competitors

Promotion is aimed at depreciating the brands and emphasizing on benefits.

Sales promotion is used to encourage brand switching

The market diversity its brand

It is the longest stage in the product life cycle

4. Decline stage
Product sales and profit decline during this stage and the stage is characterized by the
following:
(i)

The sales of the product starts to decline

(ii)

Cost of production is still low due to mass product

(iii)

The profits starts declining

(iv)

The competitors decline n number due to falling profits and sales

(v)

The company faced out the weak product items

(vi)

The prices are reduced

(vii)

Unprofitable distribution outlet are faced out and the company goes back to
selective distribution

(viii)

The promotion is reduced to the level that will retained consumers who are
loyal to the product or brand

(ix)

The company marketing is to reduce the expenses or to harvest the product

(x)

The company during this stage may take any of three options to deal with the
decline challenges

(xi)

To maintain the brand without change in hope that competitive will leave the
industry

(xii)

To harvest the product which means

reducing various cost e.g plants and

equipment maintenance, R&D promotion costs etc are reduced

The marketer hopes that the sales will hold up or to maintain the sales level remain.
To drop the product either by selling it to another firm or simply drop it from the product
line. The product exist from the market.

Criticisms of product life cycle

-

Not all products go through the four or five stages

These stages cannot be easily defined

Strategic decision can change a product life cycle

The traditional life cycle theory presuppose increasing competition and falling prices
during growth stage of the market and also the gradual elimination of competitors is
not quite true.

Some products have no maturity stage and after introduction and growth

they go

straight to decline others have a second growth period after an initial decline and still
others have no introduction but go straight to rapid growths.
Products mix/portfolios decisions.
The product mix is all the product lines and items that a company offers to the market.

Product mix width

Personal care product
Vaseline

Consumer product
Blue band

Close up

Omo

Fair and lovely

Royco

Life bouy

Cowboy

Product mix
Product mix width. It is described as the number product lines that the company carries or
offers to the market.
Product mix depth: it is described as the average number of items per product line.
Product mix consistency: it is described as the closeness of the products items in the
products mix in terms of marketing and/or production characteristic.
Product lines: it is a group of products that are closely related because they function in a
similar manner and to the same market though the same types of outlets or they fall
within a given product range.

Product line decisions

It involves two major decisions namely:
(i)

product line length

(ii)

Product line filling decision.

Product line length decision

Product line length can be described as the number of product items in the product line.
The product line can be too short or too long.
The line is too short of the management can increase profit by adding product items.
A line is too long if the manger can increase profit of the manager drops the product
items.
The different ways a marketer can stretch or lengthen the product line
(i)

Stretching downwards

(ii)

Stretching upwards

(iii)

Stretching both ways

Stretching downwards

High
prices

Reduce price
and quality

Present
producer

New producer

Low
prices

Low quality

High quality

Stretching upwards
High
prices

Low
prices

Increase
price and
quality

New
production

Present
production

Low quality

High quality

Stretching both ways

New
production

Present
production

New
production

Reasons for a company to stretch downwards

Response to the competitors attack on the upper end

Faster growth taking place in the lower end of the market

Slow growth taking place on the upper end of the market

Reasons for a company stretching upwards

company may be attracted by faster growth rate, or high profit margin at the
higher end of the market

company may want to add prestige to the current product

company may also want to position itself as a full line manufacturer

Filling in the product line

A product line can be lengthen by adding more items within the present range of the line.
There are several reasons for product line filling:
reaching for extra profit, trying to satisfy dealers, trying to use excess capacity, trying to
be the leading full line company and trying to pull holes to keep out competitors e.g sony
filled its workmen line by adding solar powered and water proof walkman and ultra light
model that attaches to a switchboard for bicycles, tennis players and other exercises.
However, line filling is overdue if it results in cannibalization and customer confusion.
The company should ensure that new items are noticeably different from existing ones.
Place or distribution decision
Meaning of channel of distribution. A channel of distribution is defined as a chain of
market intermediaries or middlemen used by a product marketer to move/provide
products and services available to the consumers when and where they want them.
Middlemen include: wholesalers, retailers, brokers/agents, distributors etc.
Different types of channels of distribution
A marketer must decide which channel to use. There are five types of channels of
distribution.
1. Zero channel of distribution.
Product

consumer

The product moves direct from producer to final consumer. It is also referred to as direct
marketing. It is common with marketing of industrial products and the marketing of

perishable goods and in case of customer made product. Customer made product are
those products made according to the specification of the consumer e.g furniture, clothing
etc.
2. One level channel of distribution
Producer

Retailer

consumer

It is referred to as one level channel of distribution because it makes use of one

middleman the retailer. This type of channel is common in the:

marketing agricultural commodities

large retailer such as super markets like Uchumi, Nakumatt are able to buy
directly from the manufacturer because of the volume of their orders

3. Prudery

Wholesaler

Retailer

consumer

This channel is more complicated because it makes use of two market intermediaries
namely wholesalers, retailers. It is also called two level channel of distribution.
The alternative level of channel distribution is as follow
Producer

Agent

Retailer

consumer

the two alternative channels is commonly used in international markets and in domestic
markets by the traders. Most consumers produces are distributed using this channel of
distribution e.g cigarettes, toothpaste, edible food, companies like EA Breweries, Coca
cola, Uniliver, Palmolive make use of this distribution.

4. Producer

Agent

wholesaler

Retailer

Consumer

It is referred to as three level channel of distribution. It commonly sued in international

marketing. However some cowponies uses in domestic markets e.g the insurance
companies. It is important to note that the more the number of levels a channel contained
the further removed the producer is form the consumer and as a result the product has less
direct knowledge of what is happening in the market.

Difference between wholesaler and agent

The wholesaler owns the merchandize which he sales to consumer on the retailers.
An agent does not own the merchandize but sales on behalf of the producer and normally
an agent is paid on a common basis.
1. Factors to be considered when selecting channels
(i) Customer characteristics
Marketer must evaluate customer characteristics such as the size of market, geographical
dispersion of the customer, customer buying habits in terms of quantity purchase, and
outlet from where they purchase.
Composition of market in terms of income, age, gender, group etc each of

these

characteristics will directly or indirectly influence the channel choice e.g where
customers are widely and sparsely scattered it would be difficult to sell direct to the
consumer or to use zero channel level of distributor, hence, along channel of distribution,
may be more useful. i.e two or three level channel of distribution. Again in terms of
composition of the market is made of industrial and household customers a combination
of short and long channels of distribution an be used e.g industrial customers zero
channel is more appropriate.
(ii) Product characteristics
They include perishability of the product. It also includes whether the product is for
household industrial consumption and it will also include the technical aspect as well as
the size of the product. Where products are highly perishable short channels are
appropriate, whoever, long channels can be used if hose product can be preserved through
processing. Custom made products such as tailor made clothes, furniture etc are
distributed directly to the buyer, thus a zero channel distribution is used.
(iii) Company characteristics
It include company objectives, financial status, product mix, past channel experiences
and the desired degree of channel control.

To sell directly to the consumers, the marketer must open up retail outlet and the cost of
doing this may be very high for some companies, therefore companies whose financial
status is weak, may find selling directly to the consumer difficult

due to financial

constraints. If a company want to retina highly degree control over the price the
consumer pay the company is likely to use short channel of distribution or sell directly to
the consumer. If a company has a wide and divergent product mix may be use for other
products and short channels is others e.g Unilever use long channels to distribute
consumer goods and short channels to distribute industrial goods, therefore the channel
use to distribute product are partly determined by company characteristics.
iv) Middlemen characteristics
the major factor here are the market the middleman serve, their financial requirement
their reliability, the service that they provide to consumer and their availability.
Some middlemen may be financially weal and they therefore insist of buying products on
a long credit term and the marketer on the other hand may not be willing to sell products
or credit terms that extend beyond the policy. In this case the producer /marketer may not
make use of such middlemen.
v) Competitive characteristics
the channel use by competitors tend to be regarded as representing the collective wisdom
of the industry, thus the marketer is likely to use the channel used by the competitors
unless his products brand demand a different channel. It is important for the producers
products to be available where the competitors brands are.
vi) Environment characteristics
economical, political,

technological, legal, socio cultural also influence channel

distribution. It is often argued that when economic condition are depressive marketer
should move the products to the market through the route that is less expensive.

Government restrict the movement of products to only one channel of distribution in that
case the marketer has no choice but, to compiled with government regulations.
2. The rationale for the use of middlemen
Functions performed by middlemen/intermediaries
Some people argue that middlemen or intermediaries are parasites

and should be

eliminated since they are not productive, other people on the other hand argue that
middlemen are vital since they perform certain functions better than the producers and
marketer.
1.Contacting function ;
They reduce the number of sales the customers and this makes it easier to the marketer
and also ensure that the consumer can get the product conveniently without a lot of effort.
***
2. Sorting:
Middlemen sort the products form various producers. In order to come up with an
assortment that is required by the consumers. These functions has the dimension namely;
bulk breaking and bulk building bulk brandy which buy in large units and * the units
down into smaller units suitable for sale. this happens when a producer is large and the
intermediaries buy relatively small quantities at each level of distribution. It is normally a
function done by wholesales and retailers. Bulk buying is the opposite of bulk b*, the
middlemen buys form different producers I and combine the items to make suitable units
for resale, this function is done very well by co-operate societies moreso in the
agricultural sector.
3. Physical distribution function:
It involves the transportation and storage of products as they move form the producer to
the final consumer. Physical distribution has this dimension namely: transportation of the
product and storage of the products.

Transportation create utility of place by ensuring that goods are available where desired.
Storage create utility of time by ensuring that product are available when required. It
facilitates continuous production since the manufactures storage space is consistently
empty. Physical distribution function also help in financing of manufactures.
4. Function of demand stimulation
Middlemen stimulates demand for the producers product through promotion and
advertisement. The difference between the middlemen promotion and the producer
promotion is that the middlemen promote all the products regardless of who is the
manufacturer.
5. Market information function
Middlemen are important sources of information about the market place particularly the
relation are closer and interact with final move than the manufactures. These are flows of
this type of information middlemen to the producer. Producers to the consumer through
middlemen.
Intensity of distribution
How many middlemen should be used at each level of distribution i.e how many
wholesalers? How many retailers? Various options. As far as intensity of distribution, the
producer has three major alterative.
(i)

intensive distribution

(ii)

selective distribution

(iii)

exclusive distribution.

1. Intensive distribution in case of this any middlemen who advocate to distribute the
product is allowed to do so. This option is more common with manufacturer of
convenience goods e.g you find salt and sugar in particularly all types of retail outlets.
2. selective distribution: Those who advocate the use of selective distribution argue
that not every retail outlet wishes to carry a given product should be allowed to do so.
It is argued that if some outlet are allowed to carry out a brand, the prestige of that
brand may be lowered hence selective distribution entails a policy of using less than

all those willing to distribute a good. It is favoured by the manufacturer of shopping

and specifically goods such as refrigerators, cookers, washing machines, expensive
watches.
3. Exclusive distribution: Entails getting into an agreement with a particular
middlemen, whereby the manufacturers gives that middleman exclusive right to
market the product in a given market. In turn the middleman agrees not to carry any
merchandize of completion exclusive distribution is favoured by the manufacturer of
automobiles.
Pricing decisions
Price is the only marketing mix variable that produces revenue all the other represents
costs.
Definition: price is the narrowest sense is the amount of money charged for a product or
service.
Def: price is the sum of all values that consumer exchange for the benefits of having or
using the product or service.
Definition: price is measure of the value exchanged by the buyer for the value offered by
the seller.
Factors to consider when setting prices
1. Organizational and marketing objectives
2. Types of pricing objectives
3. Cost
4. Other marketing mix variables
5. Channel members expectation i.e middlemen /market intermediaries
6. Competitors prices
7. Consumers or buyers perception about price
8. Legal and regulatory issues
9. Economic conditions
10. Markets and demand for products
11. Price elasticity of demand

Price setting strategies

Pricing strategy an be dividend into three major categories
(i)

New product pricing strategy

(ii)

Product mix pricing strategy

(iii)

Price adjustment strategy

1. New product pricing strategy. Companies developing new product choose between
strategies namely
a. Market skimming pricing strategy
b. Market penetration pricing strategy
Market skimming pricing strategy: A company using the strategy initially set high prices,
to skim revenue layer by layer. Marketing skimming strategy can work well when the
product quantity and image support the high price.
2. Enough buyers want the produce at that price
Competition are not able to enter the market easily to conduct the high price
Market penetration strategy involves setting a low price for a new product in order to
attract a large number of shares and market share. It * penetrating market quickly. It is
favoured by the following consideration.
(i)

market must be price sensitive so that low price produced more market
growth

(ii)

production and distribution cost must decrease as sales volume increases

(iii)

the low price must help keep out the competition

II. Price adjustment strategy. Companies usually adjust their prices to account for
various customer differences and changing situations. The following are common price
adjustment strategy.
(i)

Discount pricing and allowance. Most companies adjust their basic price to
reward customers for certain responses such as early payment of bills, large
volume purchase and off season buying. In this case the company reduce the
price by offering cash discounts, quantity discount and seasonal discount.

(ii)

Discriminatory pricing. This is selling a product or service at two or more

prices and the difference in prices does not base cost difference.
Discriminatory pricing allowance difference in customers, products and
location. This pricing strategy can take several forms e.g
a) customer segment pricing, this is whereby different customers pay
different prices for products and services.
b) Product form pricing. This is whereby different person of the product are
priced different regardless of their cost.
c) Location pricing. Different location are priced differently even though the
cost of offering each location of the same e.g movie theatres.
d) Time pricing: prices vary in seasons the monthly, day, and even the hour
e.g telephone services.

Product mix strategies

1. Product like pricing. Company product has rather single line. Customer evaluation,
competitors prices.
2. Optional feature pricing: many companies offer optional features along their main
products e.g automobile.
3. Captive product pricing. Some products require auxiliary or capture produce e.g razor
blades and camera are used without i.e the razors are useless with blades. Main
products is changed lower and captive purchasing is high
4. Two part pricing charging at a local the * a variable usage fee. Thus telephone user
pay minimum monthly bill plan changes certain limits.
5. By product pricing: the production of certain goods like meat, petroleum product if
the product half value to a customer group after they should be price on their value.
6. Product bundling: some products normally or usually sold in form of bundles
especially to wholesalers, retailers, supermarkets and even individual users or
consumers.