Notesale: Turn your study into money

Document Preview

Extracts from the notes are below, to see the PDF you'll receive please use the links above

---

 

NATIONAL OPEN UNIVERSITY OF NIGERIA

SCHOOL OF MANAGEMENT SCIENCES

COURSE CODE: MKT 201

COURSE TITLE: ELEMENTS OF MARKETING

 

 

COURSE
GUIDE

MKT 201
ELEMENTS OF MARKETING

Course Team

Matthew A
...
O
...
Onwe (Programme Leader) - NOUN
Mrs
...
A
...
edu
...
nou
...
ng

Published by
National Open University of Nigeria
First Printed 2008
Revised 2013
ISBN: 978-058-665-2
All Rights Reserved

ii

COURSE GUIDE

MKT201

COURSE GUIDE

CONTENTS

PAGE

Introduction
...
iv Course
Aims
...
vi
Working through this Course
...
… vi
Study Units
...
vii
Assignment File
...
vii

Tutor-Marked Assignment
...
viii
How to Get the Most from this Course ……………………………
...
viii
Summary…
...
ix

iii

MKT201

COURSE GUIDE

INTRODUCTION
MKT 201: Elements of Marketing is a one semester, two credit unit
course
...
The course consists of 16 study units,
covering such general areas as needs, wants, markets, marketing and its

environment, marketing mix and others
...
It also contains some guidelines on your tutor-marked

assignments
...

The field of marketing is interesting, challenging
and rewarding
...
It is a field which is encompassing, especially in modern
economic activities
...

Marketing is everywhere in our economy, and thus, it touches everyone
irrespective of age, personality, job, etc
...
All these
rely on marketing
...
Each of these activities is marketing based decision
...

I do not know how life will look like without marketing
...
globally, paying for
goods and services through e-marketing, and making business
negotiation without physically having contact
...
It is an act

that one does quite often, either as a professional marketer or consumer
...
This will

be achieved through:
iv

COURSE GUIDE

MKT201

•
•
•
•
•

introducing you to the principles and concepts of marketing
examining the environmental factors that shape an organisation’s
activities
explaining how to develop a marketing mix that will achieve
goals in the target markets
explaining how to determine the base price of a product
explaining the role of research in marketing, and ways of
conducting marketing research
...
You will also realise that each course unit objectives are
always included at the beginning of each unit
...
However, the following are some of the broad
objectives of the course
...
After studying through

the course, you should be able to:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•

describe needs, wants, market and marketing
explain variables that shape marketing activities
define product(s) and their classifications
explain various channels of distribution/marketing
describe who a middleman is, his roles and types
explain why there is a product life cycle (PLC)
define a new product, new product ideas generation etc
...


The aim of this course as pointed out earlier is to expose you to the
concept of human resource management
...


WORKING THROUGH THIS COURSE
It is expedient that you patiently read through the units, and consult the
suggested texts and other related materials
...


COURSE MATERIALS
Major components of the course are:
1
...

3
...

5
...
These are:
Module 1
Unit 1
Unit 2
Unit 3
Unit 4
Unit 5

Introduction to Marketing
Marketing Environment
Product Classifications
Channels of Distribution
The role of Middlemen in Marketing Activities

Module 2
Unit 1
Unit 2
Unit 3
Unit 4
Unit 5

vi

Product Life Cycle and New Product Development
The Marketing Mix
Market Segmentation
Packing
Branding

COURSE GUIDE

MKT201

Module 3
Unit 1
Unit 2
Unit 3
Unit 4
Unit 5
Unit 6

Labelling
Price Policies and Practices
Marketing Communication
Advertising and Publicity
Personal Selling and Sales Promotion
Marketing Research and its Applications

TEXTBOOKS AND REFERENCES
You should note that there are no compulsory textbooks for the course
...


ASSIGNMENT FILE
The assignment file will be made available to you
...


The marks you obtained for these assignments will count towards the
final mark you will obtain for the course
...


ASSESSMENT
Your performance in this course will be based on two major approaches
...

method is through a written examination
...
If you do the
practice exercises, it will facilitate your understanding of the subject

matter or topic and your TMA
...
The study
centre manager/tutorial facilitator will guide you on the number of

TMAs to be submitted for grading
...
You can only do this
assignment after covering the materials and exercise in each unit
...
Your tutor will mark and
comment on it
...

You can write the assignments by suing materials from your study units
and from textbooks or other sources
...
You
should demonstrate evidence of wide reading especially from texts and

other sources, something to show that you have read widely
...
Examples from your
own experience or environment are useful when you answer such

question
...


FINAL EXAMINATION AND GRADING
At the end of this course, you are expected to sit for a final examination
of three hours duration
...
The final examination is
a reflection of what you have read and previous TMAs Encountered

Hence, you are advised to prepare adequately for the examination
...
Here, the study units replace the university
lecturers, thus conferring a unique advantage on you
...

You should understand right from the onset that the contents of the
course are to be worked at and understood step by step and not to be

read like a novel
...
You should be
prepared at this stage to spend a much longer quality time on some units
that may appear difficult
...
Ensure that
you make necessary notes and summaries where necessary for future

reference
...
You will also be notified of the
dates, times and location of these tutorials, together with the name, and

viii

MKT201

COURSE GUIDE

phone numbers of your tutors
...

You should endeavour to attend tutorial classes, since this is the only
opportunity at your disposal to make physical and personal contact with

your tutor and to ask questions which will be promptly answered
...
This will afford

you the opportunity of participating very actively in the discussions
...
It is a philosophy that guides the entire organisation
...
However, the marketing department cannot do
all these alone; hence, it works with other departments and their team

members in the organisation
...


CONCLUSION
Welcome to the world of marketing, we wish you a successful study
...
1

Unit 1

Introduction to Marketing …
...
…
Product Classifications …………………
...

The Role of Middlemen in Marketing
Activities………………………………
...
…
Product Life Cycle and New Product
Development ……
...
…
Market Segmentation ……
...

Packing ……
...
… 91

Unit 1

Labelling …
...
…
Marketing Communication ……………
...

Personal Selling and Sales Promotion ……
...


Unit 2
Unit 3
Unit 4
Unit 5

Module 2
Unit 1
Unit 2
Unit 3

Unit 2
Unit 3
Unit 4
Unit 5
Unit 6

38

46
56
63
74
82

91
96
116
130
138
159

MKT 201

MODULE 1

MODULE 1
Unit 1
Unit 2
Unit 3
Unit 4
Unit 5

Introduction to Marketing
Marketing Environment
Product Classifications
Channels of Distribution
The Role of Middlemen in Marketing Activities

UNIT 1

INTRODUCTION TO MARKETING

CONTENTS
1
...
0
3
...
0
5
...
0
7
...
1
Definition of Marketing
3
...
3
Approaches to the Study of Marketing
3
...
5
Functions of Marketing
3
...
0

INTRODUCTION

In this course, we are principally concerned with management and
exchange and the process between a firm and its customers
...
The marketing process matches the firm’s offer and the customer’s

need in such a way that both benefit one in terms of profit and the other

in terms of need satisfaction
...

However, marketing, as you will soon see, is important whether you are
in the marketing function or any other function of a business
...
It requires creativity for success
...

This course has been designed primarily to develop your awareness of

the marketing orientation
...
The first unit introduces the definitions of marketing and

goes on to describe the various marketing decisions
...
0

OBJECTIVES

At the end of this unit, you should be able to:

•
•
•

define the term marketing
outline the concepts of needs, wants and demands
discuss the importance of marketing
list the functions of marketing in economic development
...
0

MAIN CONTENT

3
...


It is useful to pause for a while and consult some of these

definitions:
(a)

Marketing consists of the performance of business activities that
direct the flow of goods and services from producer to consumer

or user (American Marketing Association)
...

(c)

Marketing is a social process by which individuals and groups
obtain what they need and want through creating and exchanging

products and value with others (Kotler, 1984)
...

(e)

Marketing is the business function that identifies customers’
needs and wants, determines which target markets the
organisation can serve best, and designs appropriate products,
services, and programmes to serve these markets (Kotler and

Armstrong, 1996)
...

These definitions are better explained through the examination of the
following terms: needs, wants, demands, products, exchange, and some

others
...
2

Basic Concepts Underlying Marketing

3
...
1 Needs
The most basic concept underlying marketing is that of human needs
...


These needs include basic

physical needs for food, clothing, shelter and safety; social needs for

belonging and affection; and individual needs for knowledge and selfexpression
...
It is not
invented by marketers
...
When the needs are not satisfied,
a person will try to reduce the need or look for an object that will satisfy

it
...
2
...
For

example, a man in the village needs rain and food and wants fertilizer
...

but needs money
...
These wants are continually shaped and re-shaped by social
forces and institutions such as families, church, schools and business
corporations
...
Marketers, along with other operatives in society, influence
wants
...


3
...
3 Demands
People have almost unlimited wants but limited resources
...


When backed by purchasing power, wants become demand
...
For example, many desire a car such as
Mercedes Benz, Toyota, BMW, Honda, etc
...
It is therefore important for marketing
executives to measure not only how many people want their company’s
products, but also measure how many of them would actually be willing

and able to buy them
...
2
...


Broadly, a product can be defined as anything that can be

offered to someone to satisfy a need or want
...

It should be noted that people do not buy physical objects for their own
sake
...
The marketer’s job is to sell the service packages built into
physical products
...
For example, we do not buy a bed just

to admire it, but because it aids resting better
...
2
...
Exchange is therefore the act of obtaining a desired
object from someone by offering something in return
...
For example,

hungry people can find food by hunting, fishing or gathering fruits
...


Marketing focuses on this last option
...
They can concentrate on making things they are good at in
exchange for the needed items made by others
...

However, Kotler (1984) states that for exchange to take place, it must
satisfy five conditions, namely:
(i)
(ii)
(iii)
(iv)
(v)

4

There are at least two parties
...

Each party is capable of communication and delivery
...

Each party believes it is appropriate or desirable to deal with the
other party
...
Whether exchange
actually takes place, however depends on the parties coming to an
agreement
...
Hence, exchange creates value
just as production creates value
...


3
...
6 Relationship Marketing
Relationship marketing is a process of creating, maintaining and
enhancing strong value-laden relationships with customers and other

stockholders
...
2
...
These buyers share particular needs or wants that
can be satisfied through exchange
...

Originally, the term ‘market’ stood for the place where buyers and sellers

gathered to exchange their goods, such as a village square
...


3
...
8 Marketers
A marketer is someone seeking a resource from someone else and
willing to offer something of value in exchange
...


For example, Mr
...
Y or Mr
...


3
...
The best way is to read a unit quickly in order to see
the general run of the content and then to re-read it carefully, making
sure that the content is understood step by step
...
A paper and pencil are necessary
...


5

MKT201

3
...

The need for marketing arises and grows as the society moves from an
economy of Agriculture and self-sufficiency to an economy built around
division of labour, industrialization and urbanization
...
There was no marketing, because there was no exchange
...
People began to produce more than they needed of some items
...

At first, the exchange process was a simple one
...


Little or no attention was devoted to marketing, and exchange

was very local
...
At this juncture, it can be stated that marketing evolved in the
United States as a by-product of the industrial revolution
...
It was characterised by
shortages of economic resources (goods)
...
The main problem was that of production and distribution
...
In 1929 (the manufacturing era), there was manufacturing of
goods and services, but below the expected demand
...

Between 1930 and the 1940s (sales era/depression era), there was
enough production of consumer goods and services
...
The concern was to design
the most effective channel of distribution among the various
alternatives
...

When the war came to an end, there were shortages of consumer goods
...


During these periods, various authors came up with different theories
such as Professor Joe Robinson, who wrote on monopolistic economy
...
Later, people became interested in this

theory
...
He wrote an article on
‘Why people must segment their markets and differentiate their
products’
...


Besides,

consumer purchasing power and tastes are not the same
...
‘Marketing concept’ is
a business philosophy that states what the consumers want –
satisfaction - is the economic and social justification for a firm’s
existence
...

1960s (Marketing Control Era)
This is the period when the marketing department became well known
and so much important in the U
...
A
...
The attention at this period was
directed toward markets
...
Consumerism is an organised movement of
citizens and government to strengthen the rights and power of buyers in
relation to sellers
...

1980’s to-Date (Societal Era)
During this period, communication has turned the whole world into a
global village
...


3
...

(A)

Merchandising Function

1
...
It also takes into
consideration the purchasing power of the consumers, taste and

7

MKT201

PRINCIPLES OF MARKETING

market segmentation
...

2
...
This is carried out by the
production department and regulated by some government
agencies, such as Standards Organisation of Nigeria
...


3
...
These marketing institutions
include the wholesalers, retailers and agents
...


Selling
This is concerned with selling of the finished goods to the end-

users either through the manufacturers or the marketing channels
...

(B)

Physical Distribution

1
...


2
...
This includes material handling, warehousing,
etc
...


Marketing Finance
That is, allowing credits to customers and as well as obtaining
credit from customers, such as Banks, individuals, etc
...


Risk-Bearing
Risk means ‘uncertainty’
...


8

MKT 201

MODULE 1

3
...


3
...


The first and foremost role is that it stimulates potential aggregate
demand and thus, enlarges the size of the market
...
An
additional advantage which accrues in the above context is that it
accelerates the process of monetizing the economy, which in turn
facilitates the transfer of investible resources
...


Another important role which marketing plays is that it helps in
the discovery of entrepreneurial talent
...


3
...
You may ask, how does it happen? The answer is
that when a country advances economically, it takes more and
more people to distribute goods and proportionately a lesser
number to make them
...
which spring around it
...
0

CONCLUSION

In this unit, you have learned about the term ‘marketing’, its functions
and roles in the socio-economic development of a nation
...


5
...


Stages of marketing era were

examined in order to appreciate the role of marketing in nation building
...
0

TUTOR-MARKED ASSIGNMENT

i
...


With the aid of examples, differentiate between ‘needs’ and
‘wants’
...


7
...
(2000)
...
India New Delhi:

Prentice-Hall
...
J
...
Fundamentals of Marketing, 5th Edition
...


10

MKT 201

MODULE 1

UNIT 2

MARKETING ENVIRONMENT

CONTENTS
1
...
0
3
...
1 The Marketing Environment
3
...
3
The Micro Environment
3
...
5
The Macro Environment
3
...
0
5
...
0
7
...
0 INTRODUCTION
Nigeria is now part of the ‘global economy’ and the ‘global village’
...
The economic
consequences of the decline of the Far-Eastern economies are already
impacting on the Nigerian economy, and also on each and every
business as well as on every Nigerian citizen
...
This will make it more
expensive to import foreign products but will hopefully make Nigeria’s
products cheaper when exported
...
g
...
This is but one example of the influence of the marketing
environment on our country, its businesses, employees, and citizens
...
For example, a major slump in the economic
activity of a country such as Nigeria brought about by a poor

11

MKT201

PRINCIPLES OF MARKETING

agricultural output as a result of inadequate rainfall will have a
resounding effect on the employment figures in the agricultural industry
...

This is an example of the
more indirect manner in which variables of the marketing environment
may influence Nigerian enterprises and citizens
...
Within the marketing environment there are
three sub-environments (i
...
micro-environment, market environment
and macro-environment) – each of which affects the day-to-day running
of an enterprise
...
e
...
Remember that any
business should be able to do a SWOT analysis, and that most
enterprises are doing so on a regular basis!

2
...


3
...
1

The Marketing Environment

3
...
1 Composition and Functioning of the Marketing
Environment
The marketing environment consists of three components, also called
sub-environments, which are known as the micro-environment, market
environment, and macro-environment
...
In the market environment, for example, competition
12

MKT 201

MODULE 1

may have a very negative influence on the enterprise, lowering the
profitability of the enterprise and impacting negatively on wage
negotiations with the labour force
...
Note that this kind of competition is not only
encountered in the formal sector of the economy (e
...
in the case

of a

price competition on groceries between Shoprite Checkers and Pick ‘n’
Pay) but can also exist in the informal sector between two electronics

shops trading on the same street in Tinubu Square, Lagos, for example:

Composition and
functioning of
the marketing
environment

The microenvironment
The market
environment
The macroenvironment

3
...
An enterprise must perform diverse
activities in order to function properly and to attain the profit objectives
that have been decided on
...

Hajiya Amina employs two permanent flower arrangers as well as a
delivery person
...
00
...
00 per month on the delivery vehicle that she has leased
...
Within
these limitations of the micro-environment, Hajiya Amina must fulfill
her commitments and still earn enough to make a living for herself and
her two children!
This example illustrates the influence of the micro-environment on the
enterprise and shows that she can control most of the activities which
are part of the micro-environment (e
...
she may decide to employ less

staff or to move to cheaper premises)
...


These variables are also known as controllable variables
...
Guidelines
are needed for changing existing products, adding new ones, and taking
other actions that affect the assortment of products carried
...

(b)

Price

Determining the right base price for its (company’s) products is one of

the crucial micro-variable factors to be considered by the enterprise
...

(c)

Promotion

Promotion entails those weapons used to inform and persuade the
markets, regarding a company’s products
...

(d)

Distribution/Place

This is the management of the marketing intermediaries for the
distribution of the company’s products
...
Note, the management or marketing executives can manipulate
these variables to meet their company’s objectives
...


3
...


MKT 201

MODULE 1

These variables will influence the enterprise, which makes it imperative
for management to react to opportunities and threats in the market

environment
...
Identifying the target market for your product or service is
therefore one of the most important management activities to be

undertaken by management
...
We are
accustomed to the fact that various competitors compete for our money
in the case of most products and services
...

Intermediaries: The question of the gaps that exist between the

manufacturer and the final consumer was addressed in topic 1
...
New developments in
this field constitute opportunities for, or threats to, certain enterprises
operating in this particular industry
...

Suppliers: An enterprise is dependent on suppliers to run its business
...


Traditionally, the commercial banks are the suppliers of capital to small
and medium businesses
...


3
...
The enterprise cannot always
control these variables and they must be continually evaluated to ensure
that potential opportunities or threats are correctly identified
...
e
...
(Remember the
drastic increase in the price of petrol in Nigeria
...


You should have identified six variables which may affect Hajiya
Amina Enterprises in different ways
...
For
example, new manufacturing processes and new technology may
influence the type and quality of clothing being sold by
wholesalers and retailers in Nigeria
...


•

The Economic Environment
This variable is well known to everyone
...


•

The Social Environment
Social changes are prevalent throughout the world and Nigeria in
particular
...
The changing role of women in
society (e
...
more women in full-time position and more career
women as experienced in this democratic dispensation) may be a
positive variable in the case of Hajiya Amina Enterprises, and
may result in a higher turnover
...
are changing
faster than they used to; therefore, management must be alert to

them
...

Scarce resources for example are utilised in the packaging of
clothing and wastage of packaging material must be of concern to
Hajiya Amina Enterprises, for example
...
One example of the effect
of this variable would be surcharges on imported clothing
...
Other variables
include general and fiscal policies
...
As such, our economy and its businesses are
directly influenced by economic development in the Far Eastern
countries, for example
...
Audu
Giya to import his clothing at a cheaper price
...
Since
it cannot be controlled, but influenced to the company’s advantage, then

management should be alert to changes in the macro-environment
...
5

Determining the Strengths and Weaknesses of
Opportunities for and Threats to the Enterprise (SWOT
Analysis)

In order to ensure the success of an enterprise, the management must
take a careful look at the marketing environment
...


This means that the enterprise’s strengths

and weaknesses must be identified, as well as the opportunities and
threats that exist in the environment
...

Weaknesses within the microenvironment may include an obsolete
product range, unacceptable levels of pilferage and lack of capital
...
One of the greatest strengths of
SMEs is their management adaptability to a changing business
environment
...


17

MKT201

PRINCIPLES OF MARKETING

Opportunities for the enterprise can be found in the market and macroenvironment
...
It
would therefore seem that quite a number of budding entrepreneurs in

Nigeria have identified opportunities in this sector
...
For
example, a drastic fall in the Naira/dollar exchange rate is a threat to
importers of luxury goods such as cars
...
(They will be able to

obtain a higher price in naira for their products
...
5
...
The following Self-Assessment
Exercise will help to familiarise you with the elements of the SWOT

analysis
...
Your business has been operating for the past four years and
made a handsome profit, in the first three years
...

Yesterday evening you listened to the news at seven and heard about the
following major developments in the economy:
i
...

iii
...

v
...


A decline in the inflation rate of 2 per cent for the year
...

An increase in unemployment of 5 per cent, with specific
reference to the high level of unemployment in the country
...

A decline in the per capita personal disposable income of 10 per
cent during the last year
...


After listening to this news you spent the whole night thinking about it
and the implications for your business
...
The consultant advised you to do a SWOT analysis of your
business
...


18

MKT 201

4
...


5
...

These variables are known as controllable and uncontrollable variables
...

Therefore, it is the task of management to evaluate these variables and
their impact on the enterprise and to recommend strategies to utilise the
opportunities and counteract the threats
...
0

TUTOR-MARKED ASSIGNMENT

Why are the 4ps (promotion, price, product and price) referred to as
controllable variables?

7
...
(2000)
...
New Delhi, India:
Prentice-Hall
...
J
...
Fundamentals of Marketing, 5th Edition
...


19

MKT201

PRINCIPLES OF MARKETING

UNIT 3

PRODUCT CLASSIFICATION

CONTENTS
1
...
0
3
...
0
5
...
0
7
...
1
What is a Product?
3
...
3
Classification of Products
3
...
4
...
4
...
4
...
4
...
5
Industrial Goods
3
...
1 Installation
3
...
2 Equipment, Tools and Accessories
3
...
3 Raw Materials
3
...
4 Semi-Processed Components and Parts
3
...
5 Consumables and Operating Supplies
3
...
7
Marketing Strategies for Consumer and Industrial Goods
Conclusion
Summary
Tutor-Marked Assignment
References/Further Reading

1
...
These
products are sold to members of the society for money
...
Goods are normally tangible items
...
This unit introduces you to various definitions of a product,

classification of products and their characteristics
...
0 OBJECTIVES
At the end of this unit, you should be able to:
•
•
•

20

define a product
classify products into either consumer or industrial products
explain the characteristics of industrial products
...
0 MAIN CONTENT
3
...
You may like to think a little deeply on
what is meant by the word ‘product’
...
One group
answered, ‘Soaps’
...
They
even tried to help the seminar leader by putting forward their right hand
with the first finger and the thumb holding something rectangular,
thereby assisting him to visualise soap – others claimed they sold ‘bulbs,

drills, etc
...
It cannot be divested from other
marketing mix variables because all of them contribute to form the
images of the product from the point of view of the buyers
...
It is therefore
important for the manufacturers and marketers to understand what a

product means to consumers and their expectations from that product
...
Or, a
product is the bundle of benefits or satisfaction offered to a customer
...
It
includes a tangible object that marketers refers to as a good, as well as
an intangible service (such as ideas, a place, an event, an organisation),
or any combination of tangible objects and intangible services
...

It should however be noted that the consumer is not interested in your

goods
...

21

MKT201

3
...
(1987)
...
e
...


For instance, the core benefit

enjoyed by a guest in a hotel is rest and sleep
...
For example, in the case of the hotel, such
things as a bed, table, chair, bathroom, and dresser are the basic

products enjoyed by a guest in the hotel
...
e
...
For example, in a hotel,
guests expect a clean bed, fresh towels, constant power supply,

and a relatively quiet environment
...
For
example, a hotel may have a remote controlled TV set, remote

controlled air conditioner, fresh flowers, etc
...


3
...


3
...
Consumer goods can further be classified
according to the amount of efforts consumers are willing to expend for
purchases and the extent of their preferences for such products and

services
...


The functions of marketing can be classified into three, namely
merchandising function, physical distribution, and auxiliary function as

discussed in unit one
...
4
...
That is, goods which consumers generally purchase
frequently with little effort
...
These convenience
goods include soaps, newspapers, toothpastes, cigarettes, etc
...
For
example, when a person goes for shopping and sees a product which
attracts his eyes, he buys it on impulse
...

23

MKT201

PRINCIPLES OF MARKETING

3
...
2 Shopping Goods
These are goods which are purchased after going around shops and
comparing the different alternatives offered by different manufacturers
and retailers
...


In this case, the

emphasis is on quality, price, fashion, style, etc
...
Examples of such goods are clothing,

household appliances, and furniture
...
4
...
The buyers are
willing to wait until the right products are available before they buy
them
...
Specialty products are usually specific branded items rather than
product categories
...

Examples of these are cars, jewellery, fashion clothing, photocopy
machines, and cameras
...


3
...
4 Unsought Goods
These are goods that people do not seek, either because they did not plan
ahead to buy them or they did not know about their existence before
they saw them on displays at the point of purchase
...
Therefore,
aggressive and continuous promotion is necessary for them
...

SELF-ASSESSMENT EXERCISE
i
...


What is a product?
What are the levels of a product?

3
...
Industrial products are those purchased for
further processing or for use in conducting a business
...
The classification of

24

MKT 201

MODULE 1

industrial goods is based on how they are used by industries
...


3
...
1 Installation
These are major capital items that form the main assets of production
firms
...
They include product items as buildings, heavy
manufacturing machines, computers, etc
...


3
...
2 Equipment, Tools and Accessories
These are usually standardised items that are used by a wide range of
industrial users
...
They are production operating items
...
5
...
They are the materials
that go through the production line to make up the finished items
...
They are usually
standardised items that are sold on the basis of quality and their

reliability of supply
...
5
...
Parts can be used by themselves or can be

used to form components of the final items
...
5
...
They are used to
aid the running and maintenance of the organisation’s equipment and for
keeping the organisations and their machines in proper shape
...
Examples are stationery,
fuel, water, grease, etc
...
6
(i)

Characteristics of Industrial Products
The demand for industrial goods is derived from the demand for
the final goods which they are used to produce
...

(ii)

The demand for industrial goods is mostly inelastic
...
This is because most items are not
made of one single product, but a combination of products
...
If the price of the items is increased, they will
still need the same number for each car
...

(iii)

Most industrial goods have joint demands with other industrial
items
...

(iv)

The industrial goods markets are usually concentrated and few in number
than the consumer goods markets
...

Government, parastatals and other institutions that use industrial
goods are usually concentrated in few locations
...
They also know the alternative sources of these items
...


3
...
Advertising normally is an important promotional
tool for consumer products, but may not be so in the case of industrial

products
...
Industrial products generally involve

26

MKT 201

MODULE 1

high value purchases and this involves competitive bidding based on
price competition
...
As against this, consumer products are very often sold for
psychological satisfaction
...


These are some of the salient features of

marketing of consumer products as against industrial products
...
0 CONCLUSION
A product is the key marketing mix variable on which all the other
marketing mix variables revolve
...
These
images determine the values and satisfaction expected from a given
product and how much the buyers will offer for it
...


5
...


6
...

ii
...

Specialty goods
Shopping goods
...
0 REFERENCES/FURTHER READING
Akanbi, I
...
(2002)
...
Kaduna, Nigeria:
Ayokunle Printer Limited
...
(1987)
...
New Delhi:

Prentice-Hall of India Private Limited
...
J
...
Fundamentals of Marketing
...
Japan:

McGraw-Hill Book Company
...
0
2
...
0

4
...
0
6
...
0

Introduction
Objectives
Main Content
3
...
1
...
2
Types of Marketing Channels
3
...
4
Selecting an Appropriate Channel
3
...
0 INTRODUCTION
Placing goods and services where they are required and when they are
wanted is the area of concern of this unit
...
A
company’s channel decision directly affects every other marketing
decision
...
The firm’s sales
force and advertising decisions depend on how much persuasion,
training and motivation the dealers need
...
Most producers use
intermediaries to bring their products to the market
...
The use of intermediates has become necessary in
making goods available to target markets, since they cannot have access

to the producers directly
...
0 OBJECTIVES
At the end of this unit, you should be able to:
•
•
•
•

28

explain marketing channels
explain types of channels
describe the role of distribution channels in the overall marketing
of products
state the factors involved in selection of an appropriate channel
mix
...
0 MAIN CONTENT
3
...
There are a variety of middlemen and merchants who act as
intermediaries between the producers and consumers
...
A
channel always includes both the producer and the final customer for the
product, as well as all middlemen involved in the title transfer
...
This is because they play
such an active role in the transfer of ownership
...
However, Armstrong and Kotler (1994) reports
that distribution channel is ‘a set of interdependent organisations
involved in the process of making a product or service available for use

or consumption by the consumer or industrial user’
...
Many products which were intrinsically sound
have died in their infancy because they never had the right road to the

market
...
Many Nigerian manufacturers took advantage of
the distribution network built by erstwhile companies
...


However, it is better to study the distribution network before launching a

product
...
They make it possible for the
consumer to get the goods when he wants them and thus create time
utility
...
They make it
possible for the consumer to obtain goods at a price he is willing to pay
and under conditions which bring him satisfaction and pride of

ownership and thus create possession utility
...
Producers of services
and ideas also face the problem of making their goods accessible to their

29

MKT201

PRINCIPLES OF MARKETING

target consumers
...


3
...
1 Distribution
The functions performed by the members of the marketing channels

include:
(a)

Information: Gathering and distributing marketing research and
intelligence information about actors and forces in the marketing

environment, needed for planning and aiding exchange
...


spreading

persuasive

(c)

Contact: Finding and communicating with prospective buyers
and suppliers
...

(e)

Negotiation: Reaching an agreement on price and other terms of
the offer so that ownership or possession can be transferred
...


(g)

Financing: Acquiring and using funds to cover the costs of the
channel work
...


3
...
Each layer of middlemen that perform some work in bringing

the product and its ownership closer to the final buyer is a channel level
...
We use the number of intermediary
levels to indicate the length of a channel
...
These include the
physical flow of products, the flow of ownership, the payment flow, the
information flow, and the promotion flow
...

Consumer
Producer
Retailer

Consumer

Wholesaler

Retailer

Consumer

Jobber

Retailer

Consumer

Producer
Producer
Producer

Wholesaler

Fig
...
This type of channel is most commonly
used with organisational products, especially where the
product is new
...

Producer to Retailer to the Consumer: The channel from
producer to retailer to the consumer is common when the retail

establishments involved are relatively large
...
It employs a wholesaler to

take care of the shipping and transportation needs
...

(4)

Producer to Wholesaler to Jobber to Retailer to the
Consumer: the producer chooses to use agents (Jobbers) to assist
the wholesalers in marketing goods
...


31

MKT201

PRINCIPLES OF MARKETING

Channel
Industrial
Customer

1

Manufacturer

2

Manufacturer

3

Manufacturer

Manufacturer’s
Representative

4

Manufacturer

Manufacturer’s
Representative

Industrial
Distributor

Industrial
Customer

Industrial

Customer
Industrial
Distributor

Industrial

Customer

Fig
...
This is mostly associated

with complex products that require a good deal of pre-sale and
post-sale support
...

(2)

Manufacturer to Industrial Distributor to Industrial Customer:

This is the most used channel for industrial products
...

Some of the disadvantages associated with this channel are that:
(a)
(b)
(c)

(3)

32

Distributors will want access to large accounts that the
manufacturer may try to keep for itself
Distributors try to keep their product selections wide,
which frequently means carrying competing lines
Sometimes distributors do not always respond to
manufacturers’ advice regarding promotions, pricing and
operational policies
...
It also applies to those goods that are
sold across countries
...


MKT 201

MODULE 1

(4)

The fourth channel of distribution is adopted by
manufacturers which wish to have control of marketing
activities of their products
...


3
...
Many products which were intrinsically
sound died in their infancy because they never found the right

road to the markets
...

(3)

They perform the logical function of moving products from the

point of production to the point of purchase
...


3
...
The costs
involved in the use of a channel entail the price that the consumer has to
pay
...
Through proper market
feedback, an appropriate selection of channels can reduce fluctuations in
production
...


33

MKT201

PRINCIPLES OF MARKETING

The following factors usually govern the selection of channels:
(1)

The Type of Product

For selling perishable products like bread and milk or vegetable, it is
important to have a short channel of distribution which facilitates quick
movement from the factory to the consumers
...
But distribution of products having
lower units and high turnover involves a large number of middlemen as in
the case of products matches, soap, and toothpaste
...
Since not many
middlemen may be capable of providing such services, again their

number may be limited
...
If the above conditions are
not applicable, a longer channel may have to be chosen
...

(3)

Competitive Characteristics

It is a wise policy to study the existing channels of distribution,
particularly those used by competitors
...
Producers may want to compete in or near
the same outlets carrying the competition channels
...
For example, for soap and toothpaste, grocery stores are

commonly used
...
The longer the
channel of distribution, the greater its cost
...
Wholesalers shoulder some of the
responsibilities of cost of stocking and transporting goods
...

However, in making a choice, the manufacturer has to consider his
objectives, resources and the channels available to him after considering
the above factors
...
There are no set guidelines for channel
selection; therefore, manufacturers will have to take their own decisions
in the light of their own judgments and experience
...

The task of manufacturers does not end after the channels have been
selected
...
They should keep in close touch
with the changes related to the distribution of their products, and seek to

improve their marketing methods constantly
...
5

Physical Distribution Tasks

Producers/manufacturers must decide on the best way to store, handle
and move their goods and services so that they are available to
customers at the right time and place
...
Armstrong and Kotler (1994)
observed that physical distribution involves planning, implementing,
and controlling the physical flow of materials and final goods, from
points of origin to points of use, to meet customer requirements at a
profit
...
Principles of Marketing
...
Englewood Cliffs, New Jersey
There are several tasks that have to be accomplished as part of physical
distribution
...
Firstly, where to locate the
manufacturing facility and secondly, how many facilities should be set
up
...
It may decides to
35

MKT201

PRINCIPLES OF MARKETING

locate the manufacturing facility nearer to the source of supply and ship
the finished outputs to the outlying markets or to erect the production
facility near the geographical market to be served and arrange the
shipment of the inputs
...
The basic consideration involved obviously is the relative costs
of transporting inputs and outputs, including the economics of different
modes of transportation which may be used to transport raw materials

and finished products
...


If the product is a household item, such as tea, soap, or

toothpaste, the retail outlets will be at the bottom of the distribution
channel
...

(3)

Mode and Method of Transportation

There are several key decisional points in this context which for long

were considered the heart of distribution management
...
As a result, very careful
attention has to be paid to how much inventory should be maintained, of
what items and where
...
e
...

(5)

Using External Distribution Agencies

Much of what has been discussed above refers to firms which want to

distribute products on their own
...
Whether to
contract out distribution or not, is a major decision and would require an

36

MKT 201

MODULE 1

in-depth analysis of the relative costs and benefits, both tangible and
intangible, of the alternative courses of action
...
0

CONCLUSION

Distribution is the all-important link between a manufacturer and his
customers
...
Channels of distribution

refer to the alternative paths through which the goods can be routed
...


The final choice will depend on the type of product

which you are dealing with, number and location of customers and their
buying habits and costs involved
...


5
...


6
...

ii
...

Briefly explain the term “Marketing Channels”
...
0

REFERENCES/FURTHER READING

Armstrong, G
...
(1994)
...
6th Edition
...

Bogoro, P
...
Marketing Management
...

Stanton, W
...
Fundamentals of Marketing
...
Japan:

McGraw-Hill Book Company
...
0
2
...
0

4
...
0
6
...
0

Introduction
Objectives
Main Content
3
...
2
Types of Middlemen
3
...
1 Wholesalers
3
...
2 Retailers
3
...
3 Agents
Conclusion
Summary
Tutor-Marked Assignment
References/Further Reading

1
...
These complaints are most often focused on
middlemen (wholesalers and retailers)
...

Over the years, some manufacturers have made attempts to eliminate
some of these middlemen, most especially wholesalers, from their trade
channels; yet, wholesaling middlemen continue to be important and in
many cases, dominate the distribution system
...
They lack the capital needed to
maintain a sales force large enough to contact their target customers
...
Besides, most of these
target consumers are in small number groups, with limited knowledge
of the market and the suppliers
...


This unit is designed to appraise the role of

middlemen in a marketing economy and to explain various types of
middlemen
...
0

MODULE 1

OBJECTIVES

At the end of this unit, you should be able to:

•
•

explain who is a middleman
list types of middlemen
appraise the role of middlemen in marketing activities
...
0

MAIN CONTENT

3
...
Usually, it is simple but not
practical for a producer to deal directly with ultimate consumers
...
Wholesalers are those merchants
who act as intermediaries between the primary producers, manufacturers
or importers, on one side, and retailers or industrial consumers on the
other
...

They assemble
merchandise from many sources warehouses and regroup the goods for
convenient buying by end users
...
The

wholesalers perform the following functions of marketing:
•

Assembling – The wholesalers collect varieties of products from
different manufacturers and keep them in store for sale to the
retailers at the time they need them
...


•

Warehousing – The goods purchased by the wholesalers from
the manufacturers and producers have to be stocked in
warehouses pending their sale to the retailers
...


39

MKT201

•

PRINCIPLES OF MARKETING

Transportation – The wholesalers have to move the goods from
the various factories to their own warehouses and from there to

the retailers’ stores
...


•

Risk Assuming – Wholesalers assume risks arising out of the
changes in prices and demand and as well as losses due to
spoilage or destruction of goods in their warehouses and while in
transit
...


Services provided to the manufacturers by wholesalers include:
•

The Manufacturers Get the Benefit of Bulk Orders from
Wholesalers
...


•

Wholesalers Provide Up-to-Date Information for Future
Planning
...


•

Wholesalers Place Bulk Orders
...


•

Wholesalers Relieve the Manufacturers: The manufacturers
are relieved of worries by wholesalers through performance of
most marketing functions as discussed in unit one
...
1
...
In different trades,
they are called different names, such as Jobbers, distributors or
mill supply houses
...


2)

Full-Service Wholesalers: Provide a full line of services:
carrying stocks, maintaining a sales force, offering credit, making

40

MKT 201

MODULE 1

deliveries, and providing management assistance
...

3)

Limited-Service Wholesalers: Offer fewer services to their
suppliers and customers than full-service wholesalers
...


It should be noted that there are several other types of wholesalers which
you can research on at your convenience
...
1
...
This
involves selling of goods or services directly to final consumers for their

personal and business uses
...
He may sell to institutions but most of his sales are made to

industrial or household consumers
...

The retailer is the last link and the most important intermediary in the
chain of distribution
...
Retailers are
directly and ultimately in touch with the ultimate consumers and thus
occupy a strategic position in the whole chain of distribution
...

The retail shops especially in Nigeria are one of the oldest and most
widely used business establishments in a country
...

This was followed by opening up of small retail shops usually owned by
sole proprietors or small partnership firms, which are frequented by
customers for obtaining their requirements
...

These include Mama Iyabo’s Retail Store, Alhaji Bala’s Retail Store,

Mr
...


41

MKT201

PRINCIPLES OF MARKETING

FUNCTIONS OF RETAILERS
The following are some of the functions of retailers:
•

Estimation of the probable demands of the consumers for various
types of goods dealt with
...


•

Sale of various kinds of products to the consumers as and when

needed by target consumers
...

•

Storage of goods to maintain uninterrupted supply of goods to the

consumers
...
as long as they are not disposed of to the consumers
...


•

Providing information about consumer tastes and preferences to

wholesalers/manufacturers
...

TYPES OF RETAILERS
There is a wide variety of retail trading establishments
...
Hawkers and peddlers
move from door-to-door or to residential houses to sell their goods
...

Some traders sell their wares at weekly markets as applies to the rural
markets in our communities in Nigeria
...


Specialty stores

can be sub-classified by the degree of narrowness in their product
42

MKT 201

MODULE 1

line
...

(ii)

Department Stores: Carry several product lines – typically
clothing, home furnishing, and household goods with each line
operated as a separate department managed by specialist sellers

or merchandisers
...
Supermarkets earn an operating profit of only about
1% on their sales and 10% on their net worth
...

(iv)

Convenience Stores: Relatively small stores that are located
near residential areas, open long hours, seven days a week, and
carry a limited line of high-turnover convenience products
...

(v)

Catalogue-Showrooms: Sell a broad selection of high-mark-up,
fast-moving, brand-name goods at discount prices
...
Customers order the goods through a
catalogue or visit the showrooms, pick these goods as and when
visiting such stores
...

(vi)

Cooperative Stores: Consumers sometimes come together to
form cooperative societies to sell goods on retail basis
...
The capital is subscribed by the members

through the purchase of shares of small denominations
...

It should be noted that there are other types of retail outlets as well
...

ADVANTAGES
(1)

Consumers can be sure of the quality of goods in the sense that
there is no possibility of adulteration practiced by some retailers

in the private sector
...

(3)

Consumers are assured of availability of certain products even
when there is an overall shortage in the market and also at

reasonable prices
...


(2)

Large cooperative stores tend to suffer from all the drawbacks of

bureaucratic management
...

Brokers are paid by the parties hiring them
...
The most familiar
examples are food brokers, real estate brokers, insurance brokers and
security brokers
...
A broker is an intermediary whose function is only to
establish a link between the manufacturer and customer
...
There are
several types, for example, manufacturers’ agents which are the most
common type of agent wholesaler
...
They usually have a formal agreement
with manufacturers: covering prices, territories, order-handling
procedures, delivery and warranties and commission rates
...
Most manufacturers’ agents are small entities, with only a few
employees who are skilled salespeople
...

Apart from the manufacturer’s agent, there are other types namely:

selling agents, purchasing agents, commission merchants, etc
...
0

CONCLUSION

Blood is vital in the life of a man, so also middlemen are inevitable in

any economy, most especially in developing countries like Nigeria
where technologies for facilitating buying and selling of goods/services
are still low
...
Even though they are
sometimes criticised as creating artificial scarcity, convenience and time

saving created for consumers are issues to be reckoned with
...
0

SUMMARY

With an understanding of the retailing and wholesaling institutional
structures as a foundation, marketing executives are in a position to
design and manage distribution channel systems for their companies
...


6
...
0

REFERENCES/FURTHER READING

Armstrong, G
...
(1994)
...
6th Edition
...

Kotler, P
...

Marketing Management – Analysis, Planning,
Implementation and Control, 8th Edition
...

Stanton, W
...
Fundamentals of Marketing
...
Japan:

McGraw-Hill Book Company
...
0
2
...
0

4
...
0
6
...
0

Introduction
Objectives
Main Content
3
...
2
Marketing Mix at Different Stages
3
...
4
New Product Development Strategy’
Conclusion
Summary
Tutor-Marked Assignment
References/Further Reading

1
...
This unit will give you a
complete picture of what happens from the time a new product is
introduced till it declines, and will show you how the decline can, to a

certain extent, be postponed
...
Sometimes organisations revive declining
products by modification or else they follow several steps ranging from
identification of market opportunity to launching of new products to
replace the declining products
...


46

BHM 206

2
...


•
•
•
•

3
...
1

The Product Life Cycle Concept

A company which introduces a new product naturally hopes that the
product will contribute to the profits and provide consumer satisfaction
for a long period of time
...
So, progressive organisations try to remain aware of what is

happening throughout the life of the product in terms of the sales and the

resultant profits
...
1: Sales Trend – Introductory Stage
The Introductory Stage
Let us start thinking from the very beginning about what happens when
a new product is introduced in the market
...
If
the product is well-designed, the sales would not increase slowly but
would shoot up after some time as in (a)
...
A poorly designed product may
experience a slow take off as shown in (a)
...
This stage is called the

‘introduction’ or ‘innovation’ stage in the life cycle of a product
...
There are some
prerequisites for that too
...
It must be available at the distribution outlets and all this
takes some time
...

The Growth Stage
In case the product launched is successful, the sales must start picking

up or rise more rapidly
...


Here, the sales would climb up fast and profit

picture will also improve considerably
...

As the volume of production is increased, the manufacturing cost per
unit tends to decline
...

The Maturity Stage
It is too optimistic to think that sales will keep shooting up
...
In case
your product is a novel one, by now competitors will come out with a

similar product in the market to compete with yours
...
Thus, the sales reach a plateau
...
At this point, it is difficult to push sales up
...
Unless, of course, you have the largest market share with
your product and it needs no extra push in the market
...
Steps should be taken to prevent this obsolescence
and avoid the decline
...
This is the stage
where the profits drop rapidly and ultimately, the last stage emerges
...

Figure 2 shows the ‘product life cycle’ and the different stages
...
2:

3
...
specify

(1)

Introduction Stage
(a)
(b)
(c)
(d)

Price
(
Physical
Distribution
(
Promotion
(
Product
(

)

(

)

(

)

(

)

(

)

(

)

(

)

(

)

(

)

(

)

(

)

(

)

(

)

)
)
)

49

BHM 206

(2)

MODULE 2

Growth Stage
(a)
(b)
(c)
(d)

Pricing
(
Physical
Distribution (

)

(

)

(

)

(

)

)

(

)

(

)

(

)

Promotion
Product

)
)

(
(

)
)

(
(

)
)

(
(

)
)

(
(

At the introductory stage, we have to increase and thus spend a lot on
physical distribution and promotion
...
We must also increase its
availability
...
This is a waste
of promotional expenses
...
Thus, distribution should be arranged

before the product is launched
...
We have to also counter the reluctance of customers to change

their established patterns and make them purchase our product,
particularly if it is of a novel nature
...

Next is the growth stage, when the sales shoot up and we are satisfied
with the profit generated by the product; competitors will now enter the
market and perhaps offer new product features
...
The promotional expenditure is maintained

at the same level or is raised slightly in order to meet competition
...
This stage
generally lasts longer than the other stages and poses problems for the

management in maintaining the sales level
...
The

decline can be arrested by improvements in the product and promotion
...

Finally, the decline stage catches up
...
It may

be due to better substitute products, better competition, technological
advances with which we have not kept up and several other reasons
...
One must, therefore, be willing to consider the elimination

50

BHM 206

PRINCIPLES OF MARKETING

of such marginal or unprofitable products
...


This is dangerous because this is a very crucial

time when extra promotional effort is required to be put in to prop up the
product’s sales
...


3
...

Consider some of the following points to avoid decline:
i
...

iii
...

v
...


improve product quality
add new product features resulting in extra benefits
penetrate new market segments
give incentives to distribution channels
expand the number of your distribution channels; and
Improve advertising and sales effort
...
That is why it is
sometimes said that innovation is the life-blood of marketing
...
In connection with
the product, it would mean quality improvement or improvement in
features
...

SELF-ASSESSMENT EXERCISE 1
Identify at least two products in each stage of product life cycle in
Nigeria:
(i)
(ii)
(iii)
(iv)

3
...
Many products fail, and in order to keep
expanding company sales, we must have new products
...
Several stages must be defined
...
These will now be

discussed in details
...
3: Stages in New Product Development
Generation of New Product Ideas
The first step obviously is to get ideas with regard to possible new
products
...

As marketing is aimed at satisfaction of consumer needs, an alert
marketer can get some ideas from the customers for possible new
products by keeping his eyes and ears open and more particularly the
mind to perceive even needs which are so far unexpressed
...

Thus, new ideas can come from customer needs or problems requiring a
solution
...
This is because they
are in constant touch with the market, that is, both consumers and
competitors
...
Finally, company executives and even the lower
staff can be brought in for discussions
...
This
is basically done to have a flow of ideas – good and bad
...


mention it without evaluation
...


They are asked to

The answers are

recorded on a tape recorder so that the flow is not interrupted
...

Evaluation or Screening of the Ideas
So far, from the first stage, we have received a number of ideas – good
and bad
...
This is known as the ’evaluation’
or ‘screening’ of ideas stage in this process
...
The ideas must be consistent with the company’s
philosophy, objectives and strategies and be in terms of the resources
available in the organisation
...


Product Concept Development and Evaluation
Particularly when the product idea is rather revolutionary, the concept
itself must be tested
...
This is a concept which has to be tested in the

environment in which the product is sought to be introduced
...
This was a failure of concept testing
...

So far, what we had was only a description or an idea
...
Prototypes are developed and tested
...


At this stage of
53

BHM 206

MODULE 2

product development, the technical problems, if any, must be solved
...
Even a small defect might shorten the life cycle of the

product as well as spoil the company’s image
...


In fact, the following can be stated as requirements for the new
product, after it is designed:
•
•
•
•
•
•

satisfactory performance
customer acceptance
economical production
adequate distribution
adequate servicing arrangements where required, and
effective packaging and branding
...
This will help us find out whether the product can be launched

successfully on a commercial scale or not
...

Sales Excellent

Launch the Product
Sales
Organize
New Market

Market Test

Sales Fair
Sales Poor

Sales Fair
Modify
Product

Market Test

Modify
Product

Market Test

Sales Poor
Drop the
Product

Fig
...


As against this, if it

shows that the sales are ‘poor’, there are generally two alternatives
available from a practical viewpoint
...


If the sales are ‘fair’, we may modify the

product or conduct a new market test
...

An alternative, generally available, is to modify the product in terms of
the feedback which has been received from the market test, and then test
again before the final decision is taken to launch the product
commercially or to drop it
...
A decision must, therefore, be arrived at as

early as practicable
...
0

CONCLUSION

The introduction of a new product is not an easy decision
...


5
...


6
...
0

REFERENCES/FURTHER READING

Davar, R
...
(1969)
...
Bombay:

Progressive Corporation Private Limited
...
(1987)
...
5th Edition
...


55

BHM 206

MODULE 2

UNIT 2

MARKETING MIX

CONTENTS
1
...
0
3
...
0
5
...
0
7
...
1
The Marketing Mix
3
...
3
Pricing
3
...
5
Place/Distribution
3
...
7
Roles of Pricing and Advertising in Marketing Mix
Conclusion
Summary
Tutor-Marked Assignment
References/Further Reading

1
...
These ideas must be turned to
appropriate products or services desired by the consumers; otherwise,
the products are as useless as if they did not come into existence
...
These activities involve a lot of tasks which
must be adequately planned and executed by individuals saddled with
such responsibilities
...


2
...


3
...
1

The Marketing Mix

•

Once the company has decided on its overall competitive marketing
strategy, it is ready to begin planning the details of the marketing mix
...


56

BHM 206

PRINCIPLES OF MARKETING

Marketing mix is defined as the set of controllable, tactical marketing
tools that the firm blends together to produce the response it wants in the
target market
...
It is also
described as the combination of the four inputs that constitute the core

of a company’s marketing system: the product, the price, place and the

promotion
...
Also, the decisions in one area usually affect action in the
others
...


For

instance, a company may market one product or several related or
unrelated products
...
It therefore implies that
management must select the combination that will best adapt to the
environment
...


3
...
A product, service or idea may be defined as

something which is given to consumers in exchange for a price
...


Guidelines are needed for changing existing products, adding new ones,
and taking other actions that affect the assortment of products carried
...

Research and experience in the marketplace have indicated that a
marketer should treat the product as a bundle of satisfaction offered to

consumers rather than as a physical item
...
For example, the purchaser of a refrigerator wants troublefree operation, space, convenience, an aesthetic design rather than just a
refrigerator cabinet and motor
...
Therefore, marketers who
view the product as a bundle of satisfaction are able to fulfil their
mission of servicing the consumer, and can benefit accordingly through
increased sales
...

ii
...


Colour film
Personal computer
A book
...
2

The Price

Price is defined as the amount of money that consumers must pay in
exchange for the product, service or idea
...

(b)

Cost: How much it costs to produce and market the product i
...


both production and distribution costs
...

(d)

The Law: Government authorities place numerous restrictions

on pricing activities
...
These should be

considered while pricing
...


3
...
Distribution is made up of two components: (1) physical

distribution, and (2) channels of distribution
...
Examples include:
(1)
(2)
(3)
(4)
(5)

Transportation
Warehousing and storage
Order processing
Inventory control
Location
...
The physical distribution network should

be oriented towards the needs and desires of target consumers
...

In establishing channels of distribution, marketers should decide which
marketing functions are needed in order to satisfy target consumers, and
then determine which institution (such as wholesalers and retailers or the
manufacturer himself) can best perform these functions
...


3
...
The important promotional
methods are:
(a)

Advertising – where an identified sponsor pays media (NTA, for
instance) to transmit messages to target consumers
...

(c)

Sales promotion – where the marketer utilises displays,
demonstrations, premiums, contests, or similar devices to
supplement advertising and personal selling
...


59

BHM 206

MODULE 2

Like other elements of the marketing mix, promotion should be aimed at
the target audience rather than at consumers at large
...
If
target consumers tend to be highly educated, promotion messages
should be more sophisticated than when target consumers have low
levels of education
...


3
...
However, there are
occasions when the product is designed to fit some other component of
the mix
...
But you must not forget that the various
elements of a marketing mix are conceptually interconnected to meet
some want and so there must be a procedural interconnection in

designing the various components
...
It is
a key consideration when the want is likely to be latent or passive for the
majority of the members of the target market
...

In the case of pricing, price can be important not just in terms of cost to
the consumer, but as contributing to the image of the product
...

Finally, the role of a distribution strategy in new product development
should not be underestimated
...
e
...
Hence, the role which distribution channels are

expected to play must be investigated at the earliest stage possible
...
e
...


60

BHM 206

PRINCIPLES OF MARKETING

SELF-ASSESSMENT EXERCISE 2
Nowadays, a number of well-established companies are trying to
diversify into both existing as well as new areas
...
For example, Guinness and Coca-cola have diversified
some of their products
...


3
...

Economists call such a
situation an oligopolistic situation
...
The question that
arises is – why do firms prefer such a strategy? The reason is that
building up an image through advertising can be more difficult to
match than a price cut
...

(b)

Pricing – Price may be the major element in the marketing mix
...
For example, the luxury
segments of consumer markets suggest a quality, branded
product, extra-touches, high class outlets, appeals and media that
capture the luxury image and a high price to match
...


2
...


Advertising can have a wider reach and establish an image for a
product that cannot be matched in personal selling
...

Advertising can close a sale
...

Advertising can distinguish suspects from prospects
...


(True or

61

BHM 206

MODULE 2

4
...


4
...
price, product, promotion and distribution in such a
way that he/she will achieve the necessary volume of sales at a cost that
will permit him/her to make a desired profit
...


This means that the needs and wants of the target consumers

have to be studied and interpreted and a unique blend of various
elements of the marketing mix has to be designed to reach a specific

group of consumers
...
0

SUMMARY

In this unit, we discussed marketing mix and its elements as they affect
marketing activities
...
0

TUTOR-MARKED ASSIGNMENT

Are price and promotion to some extent substitutable?

7
...
(1981)
...
3rd Edition
...

Kotler, P
...

Marketing Management: Analysis, Planning,
Implementation and Control
...

Stanton, W
...
(1981)
...
6th Edition
...


62

BHM 206

PRINCIPLES OF MARKETING

UNIT 3

MARKET SEGMENTATION

CONTENTS
1
...
0
3
...
0
5
...
0
7
...
1
The Concept of a Market
3
...
3
Benefits of Market Segmentation
3
...
5
Bases for Segmenting Consumer Markets
3
...
7
Methods for Segment Selection
Conclusion
Summary
Tutor-Marked Assignment
References/Further Reading

1
...


Even in the

case of non-profit and non-manufacturing set-ups, it becomes important
to achieve marketing goals in the most economical way
...
One
of the ways to obtain economies in marketing is to concentrate and focus
the marketing efforts in respect of a well defined homogeneous cluster
of potential customers
...
In target marketing, sellers distinguish the
major market segments, target one or more of these segments, and

develop products and marketing programmes tailored to each segment
...
In this unit, we will examine the concept
and bases for market segmentation
...
0

OBJECTIVES

At the end of through this unit, you should be able to:
•
•
•
•

explain the term market segmentation
discuss the bases for market segmentation
explain benefits derived from market segmentation
explain methods of segment selection
...
0

MAIN CONTENT

3
...
To identify the target market, let
us first define the term ‘Market’
...


(b)

It can be used in respect of the network of institutions like
wholesalers and brokers dealing in a product
...


(d)

A market can be referred to as people with needs and wants, with
enough disposable income to spend on goods and services
provided to satisfy their special needs and wants and the

willingness to expend their income on these goods and services
...


Before you proceed further, do attempt this exercise
SELF-ASSESSMENT EXERCISE 1
In your own word(s), Can you then stop and explain what a market
means?
In the market demand for any given product or service, there are three

factors to be considered – people with needs, their purchasing power and

their buying behaviour
...
1

The Concept of a Segment

The previous discussion must have helped you to understand the term
‘market’
...
But different buyers have different evaluative criteria

64

BHM 206

PRINCIPLES OF MARKETING

about what constitutes the right choice for performing the function
...

For example, all brands of colour television sets will appeal, to some
degree, to those in the market for a colour TV, but some brands will
appeal to some groups than others
...
But as the market
develops, manufacturers seek to cater more closely to some groups than

to others, and buyers’ choice widens as a result
...
But on the basis of

similarities and differences, such unique wants can be grouped into subclasses
...

Based on the above discussion, we can now attempt to explain Market

Segments and Process of Market Segmentation
...
1
...

A market segment consists of a large identifiable group within a market
...

Akanbi (2002) defines it as the process of dividing the consumers in a

given economy into target markets
...
Market segmentation is a customer-oriented philosophy
...
Yet they are not identical
...

For example, in buying a car, some consumers may buy
those windows with manual winders, while others may reject them
...
while others may prefer fewer
amenities and a lower price
...
However, market segmentation can also be accomplished with
no change in the product, but rather with separate programmes, each
tailored to a given market segment
...
Here, the promotional programmes

for the two markets will be different
...
2

Benefits of Market Segmentation

Segment marketing offers several benefits, which include the following:
(a)

The company can create a more fine-tuned product or service
offer and price it appropriately for the target audience
...


(c)

Such a company may face few competitors if fewer competitors
are focusing on this market segment
...

(e)

Segmentation helps in focusing strategies more sharply on target
groups
...


3
...


However, to be useful, market segments must have the

following characteristics:
(1)

Measurability: The size, purchasing power and profiles of the
segments should be measurable
...
For example, Kotler (1997)
reported that there were 24 million left-handed people in the

United States – almost equalling the entire population of Canada
...
The major
problem may be that the segment is hard to identify and measure
...
Suppose a perfume company finds that
heavy users of its brand are single men, who stay out late and
socialise a lot
...

(3)

Substitutability: The market segments should be large or
profitable enough to be served
...

(4)

Actionability: Effective programmes should be designed in order
to be attractive and to serve the segment(s) better
...
4

Bases for Segmenting Consumer Markets

There is no single way to segment a market
...
Here, we examine major

variables
...
4
...
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
...
Coca-cola and

Pepsi-cola uses this method for their products
...
4
...
Demographic factors are the
most popular bases for segmenting customer groups
...
Another is that demographic variables are easier
to measure than most other types of variables
...

Age and Life Cycle Stage
Consumer needs and wants change with age
...
Marketers must, however, be careful to guard against
stereotypes when using age and life cycle segmentation
...
Other elements are gender, income, etc
...
4
...

People in the same
demographic group can have very different psychographic make-ups

such as:
(a)

Social Class – Many companies design products or services for
specific social classes, building in features that appeal to these

classes
...
are good examples of this
...

Examples of this are films, books, magazines, etc
...
Successful market
segmentation strategies based on personality have been used for
products such as cosmetics, cigarettes, insurance and liquor
...
4
...
Many marketers believe that
behavioural variables are the best starting point for building market

segments
...
Occasion segmentation can help firms build up
product usage
...

b)

Benefits Sought – A powerful form of segmentation is to group
buyers according to the different benefits that they seek from the
product
...

Colgate Palmolive for
example, used benefit segmentation to reposition its Irish spring
soap
...
Others could be flower and product appearance,

brightness, etc
...
Note, potential and regular users may require

different kinds of marketing appeals
...
Industrial products are easily classified
under this, such as: salt, starch, sugar, cement, roofing sheets, etc
...
These are variables of behavioural segmentation
...
5

Segmenting Industrial/Business Markets

You might assume that the bases for segmentation will differ between
industrial and consumer markets
...
e
...

For instance, segmenting markets on the basis of end-user application is
essentially benefit segmentation; a demographic basis is geographical
location; while a behaviour basis is the way the company buys
...
as applied to the

selection of suppliers
...

Please suggest suitable lifestyles that a marketer may use in the case of
the following products:
(a)
(b)
(c)
(d)

Men’s clothing
Motorcycles
Soft drinks
Tea
...
6

Methods of Segment Selection

Before selecting a basis, you must arm yourself with substantial
knowledge about the buyer
...
It
should however be noted that if it were easy to identify the various mixes
of benefits sought by the various groups in the market, segmentation
would hardly present any problem
...
As such there is no standard answer
to what basis is the best in a particular case, and companies resort to one
or more of the following:
(1)

Intuition and Experience – Many marketers try to segment their
market on the basis of their empathetic understanding of the
situation
...


(2)

Trial and Error – Trial and error is another method which is
used to divide a market into different groups based on product
attributes, and to subsequently check such groups is proving
meaningful in terms of market response
...

(4)

Research on Attitude and Perceptions – This is an area which
currently arouses the greatest interest
...
Perceptual

mapping is one technique which is used for such research
...
7

Selection of Segments

Before we conclude this unit, let us examine how companies select their
segments
...

(1)

General Factors

a)

Company Thrust – The company that is segmenting its market
needs to identify the requirements for success in the concerned
target market
...
will be needed to meet the requirements for success in that

segment
...

b)

Size and Growth Potential – Not only the present size but also
the future growth potential of the concerned target market must
be considered
...
Besides the measurement might also create its own
problem
...


d)

Profitability – The question of profitability is associated with
investment decisions
...
What must also
be considered is value-added to the product that is to be marketed
in that target segment
...
Other risks should as
well be considered
...

Another important point to note in this context is that the segment
may be large, but may already be well served by several wellentrenched competitors
...


(2)

Specific Factors

•

segment durability
mobility
visibility
accessibility
...
Some of
the products could be:

•
•

cellular phones
toothpaste
paper
...
0

CONCLUSION

•

A sound marketing programme starts with the identification and analysis
of the market for a product or service
...


For most products, the total

market is too broad and heterogeneous for a strategy of market
aggregation
...


5
...
market and
segment
...
Next, we discussed benefits of market segmentation,
conditions for effective segmentation, bases for consumer and industrial

markets segmentation, and methods for segment selection
...
0

PRINCIPLES OF MARKETING

TUTOR-MARKED ASSIGNMENT

As the market becomes more and more competitive, does that
necessitate more segmentation?

7
...
F
...
H
...
Strategic Market Planning: Problems
and Analytical Approaches
...

Akanbi, A
...
(2002)
...
Kaduna: Ayokunle

Printers Limited
...
J
...
Benefit Segmentation: A Decision Oriented

Research Tools
...
30 – 35
...
(1997)
...
9th Edition
...

Stanton, W
...
(1981)
...
6th Edition
...

Yankelovich, D
...
New Criteria for Market Segmentation,
Harvard Business Review
...
83 – 90
...
0
2
...
0

4
...
0
6
...
0

Introduction
Objectives
Main Content
3
...
2
Importance of Branding
3
...
4
Reasons for not Branding
3
...
6
Branding Decisions
3
...
0

INTRODUCTION

In developing a marketing strategy for individual products, the seller has
to confront the branding decision
...
For instance, developing a branded product requires a great
deal of long-term investment spending especially for advertising,
promotion and packaging
...
For example, Taiwanese
Manufacturers make a great amount of the world’s clothing, consumer

electronics, and computers, but not under Taiwanese brand names
...
Even when these companies can no longer
afford to manufacture their products in their homeland, the brand names

continue to command customer loyalty
...
A sufficient number of customers demand these
brands and refuse substitutes, even if the substitutes are offered at
somewhat lower prices
...
In this unit, we examine brand names

and their implications for marketing products and services
...
0

PRINCIPLES OF MARKETING

OBJECTIVES

At the end of this unit, you should be able to:

•

define a brand name
differentiate various types of brand names in our markets
give reasons why companies invest millions of naira in choosing
a brand name
explain the characteristics of a good brand name
...
0

MAIN CONTENT

3
...
In earlier times, when the
concept and practice of branding was much less developed, very often

the family name or surname was used
...
The other common method

of branding was by way of addressing the product range of the company
...
It
seems the function that brands were supposed to perform was either to

indicate the source or the origin of the product (family name) or indicate
the product range
...
Let us examine the
conceptual meaning of the terms brand and brand name
...


Marketers say

that branding is the art and cornerstone of marketing
...
The definition clearly focuses on
the function of a brand, that is, to identify, irrespective of the specific

means employed for the identification
...


75

BHM 206

MODULE 2

The American Marketing Association defines a brand as ‘a name, term,
sign, symbol or design or a combination of them, intended to identify
the goods or services of one seller or group of sellers and to differentiate them

from those of competitors’
...

Comparing this definition with that of other authorities, it is found that
the function remains the same
...
Examples of brand names are:

Toyota, Honda, Mercedes, Mobil, Shell, Lux and Omo
...
Examples
include: ‘the Lion’ for Peugeot cars, the ‘Star’ for Mercedes Benz cars

and a ‘Stallion’ for Union Bank of Nigeria Plc
...
Trademarks are brands, but not
all brands are legally protected
...

The American Marketing Association defines a trademark as ‘a brand
that is given legal protection, because under the law, it has been

appropriated by one seller’
...

All trademarks are brands and thus include the words, letters or numbers
that can be pronounced
...
Some people erroneously believe that the trademark is only the
pictorial part of the brand
...
2

Importance of Branding

The importance of branding is as follows:
(1)
(2)

76

Brands make it easy for consumers to identify products or
services
...


BHM 206

PRINCIPLES OF MARKETING

(3)

For sellers, brands are something that can be advertised and that
will be recognized when displayed on shelves in a store
...

(5)

Branding reduces price comparisons, because it is hard to

compare prices on two items with different brands
...

SELF-ASSESSMENT EXERCISE 1
i
...


Differentiate between brand name and brand mark and trademark
...
Discuss
...
2

Reasons for Branding

There are various reasons why a company may wish to adopt a brand

name and/or trademark
...
It gives the
marketer a different product to promote
...

(2)

Brands help to ascertain who the producer of the product is
...

(3)

Branding enables a company to control the distribution and the

price of its product because of its distinct nature
...


It helps to build loyalty for the

product and increase repeat purchases
...


The

qualities associated with an established line can be exploited to

reflect on a new product marketed under the same brand name
...
3

MODULE 2

Reasons for not Branding

Some of the reasons for not branding include the following:
(1)

Many firms do not brand their products because they are unable
or unwilling to assume the two major responsibilities inherent in
brand ownership: (a) to promote the brand and (b) to maintain a

consistent quality of output
...

For example, clothes pins, nails and industrial raw materials
(coal, cotton, and wheat) are examples of goods for which
product differentiation is generally unknown
...

(3)

Producers frequently do not brand that part of their product
(output) that is below their regular quality
...


3
...
It is extremely difficult to find a brand that has all of them
...
Some names suggest desirable benefits
including cold spot, craftsman (tools), etc
...

(2)

Be easy to pronounce, spell, and remember, simple, short, onesyllable names such as Omo, Mobil, Total, Toyota, Shell, etc
...


(3)

Be distinctive
...


(4)

Be adaptable to new products that may be added to the product

line
...


BHM 206

3
...

Several decisions need to be taken, though not simultaneously, with
regard to brand selection and its use
...

In addition, marketers also have to decide at the outset whether they
would like to adopt a family brand under which all the products of the

company would be sold or to brand each product separately
...

These are the advantages in either approach:
(A)

Family Brand

(1)

It reduces the costs of product launching and ongoing
promotional expenditure substantially
...
Lining up the distribution channel members
also becomes comparatively easier
...


(2)

If one product does exceptionally well, it is perfectly possible that
there would be positive fallouts for other products being
marketed under the same brand
...

(B)

Individual Brand

(1)

If there is a product failure, its damaging effect will be limited to
that particular product and will not extend to the entire product
line
...


(2)

79

BHM 206

(3)

MODULE 2

The basic disadvantage lies in the economics of developing an
individual brand
...

(4)

The other disadvantage is that the brand does not directly derive

any benefit from the reputation of the firm
...
6

Brand Repositioning

Over the life cycle of a product, several market parameters might
undergo a change such as introduction of a competing product, shifts in
consumer preferences, identification of new needs, etc
...
Stagnating or declining sales also

point to a need for reassessment of the original product positioning
...
Seven-up was one of several soft drinks bought primarily by
older people who wanted a brand, lemon flavour drink
...

Seven-up went up for leadership in the non-cola market by executing a
brilliant campaign, calling itself the Uncola
...
Seven-up created a new way for consumers to view the soft
market, as consisting of colas and uncolas, with seven-up leading the
uncolas
...


Another exciting story of brand

repositioning is Pepsi Cola’s campaign to reincarnate its flagging 30year old Mountain Dew brand
...
Find/look for a product which
has been repositioned
...


4
...
The name gives the
product the unique personality and is so well associated with the product
that the brand name sometimes even takes the place of the generic
product name
...
e
...
The

80

BHM 206

PRINCIPLES OF MARKETING

selection of brand name is an important decision
...


5
...


6
...


7
...
I
...
Fundamentals of Marketing
...

Diamond, S
...
(1962)
...
July, pp
...

Kotler, P
...

Marketing Management: Analysis, Planning,
Implementation and Control
...
New Jersey: Simon and

Schuster Company
...
J
...
Fundamentals of Marketing
...
Japan:

McGraw -Hill Book Company
...
0
2
...
0

4
...
0
6
...
0

Introduction
Objectives
Main Content
3
...
2
Reasons for Packaging
3
...
4
The Growth of Packaging Usage
3
...
6
Criticisms of Packaging
Conclusion
Summary
Tutor-Marked Assignment
References/Further Reading

1
...

Some products are highly demanded by consumers, not because of their
performance, but due to their attractive packages
...
Packaging is
one of the marketing tools that marketing executives use to attract, to
promote and to protect their products
...

These days, packaging is synonymous with contents/services offered
...
Some companies’ products fail not because
of their products performance, but because the packages are defective
...


2
...


BHM 206

PRINCIPLES OF MARKETING

3
...
1

Packaging

Packaging has been variously defined in both technical and marketing
literature
...
Kotler
(1997:458) defines packaging as including the activities of designing

and producing the container or wrapper for a product
...
”
An understanding of the packaging industry is necessary to fully
appreciate the packaging revolution that has occurred in the consumer
and industrial goods sectors
...

Newer materials are constantly emerging in the packaging field and in
many cases, which have eliminated or threatened the older materials,
such as wood and steel, because of the relative cost advantage or better
performance characteristics
...
2

Reasons for Packaging

-

Aluminium, Tinplate and steel
PVC, HDPE, etc
...

Clear, tinted, etc
...


There are various reasons for packaging, among these are:
(1)

Packaging is used to protect the contents of the product from
spoilage or wastage
...
This protective package is referred to as the primary

package
...
The primary

package can be so designed as to attract customers to the product
...
Designs, sites and colours of packages can also be
employed as means of promoting the product at their points of

sale
...

Packaging helps to identify a product and thus may prevent
substitution of competitive goods
...
In
the case of convenience goods or industrial operating supplies,
for example, most buyers feel that one well known brand is about
as good as another
...


(4)

Management may package its product in such a way as to
increase profit possibilities
...
Also, an increase in ease of handling or a reduction in
damage losses will cut marketing costs, again increasing profit
...
3

Functions of Packaging

Packaging provides the following functions:
(1)

Protection: This is the one which is the oldest and most basic
...
The specific types
of hazards against which protection has to be sought would
obviously vary from product to product
...
These
are:
(a)

Breakage/damage due to rough mechanical or manual handling
during transportation
...


(c)

Contamination either bacterial or non-bacterial, such as by dirt or
chemical elements
...


(e)

Loss of liquid or vapour
...
The importance is also
substantially due to the changed structure of retail business,

especially the emergence of self-service stores
...
This is true irrespective of whether the product is a luxury,
semi-luxury or an ordinary everyday use product
...

The package must tell the product industry
...

The package must look clean and hygienic
...

The package must reflect good value
...


Industry-wide studies in several countries

showed that packaging costs in the cosmetics industry far outrun those

of other industries
...
Other
products, such as chocolates in gift packs also are instances where
packaging performs a basic marketing function by making the products

more appealing
...
The first one is colour and the second is the package or

container design
...

One additional problem in this area is that nationals in different
countries display divergent colour preferences, due to their diverse
socio-cultural-religious backgrounds
...


Slender, cute-

containers are often used for beauty-care products for the feminine sex,

as these are expected to create an appropriate image of the product
...

There are several accepted promotional packaging techniques
...


Money-off Pack: A ‘flush’ in distinctive colour is superimposed
on the package, announcing the specific price discount being
offered
...


b
...


c
...
e
...
g
...


d
...
Instant coffee packed in drinking glasses
having closures is an example of the first type
...

(3)

Performance: This is the third function of a package
...

becomes crucial in certain types of packaging
...
If the package does not function, the product itself

becomes totally useless
...
The important point to be appreciated
however is that it should be convenient, not only to the end-users,
but also to the distribution channel members, such as wholesalers
and retailers
...
The specific attributes

they would seek in a package in this context are:
The package must be convenient to stock
...

b
...

d
...

The package does not waste shelf-space
...

The master packages/cartons are easy to dispose of
...
However, from the
standpoint of domestic or institutional end-users, convenience would refer
to the use of the package, such as opening and closure of the

package, the repetitive use value, disposability, etc
...

Packaging cost as a percentage of product cost varies
dramatically from one industry to another
...
This is only one, though the
most important, element of the total costs associated with
packaging
...


Package costs incurred in inward delivery to the factory when the
product is purchased from outside
...

Storage costs of the filled packages
...

Insurance cost for the transit period, etc
...

c
...


e
...
Despite Colgate’s market strength, the

small pack did not perform as expected in the market
...


Find out the differences between the existing and the new
packaging
...


Do you think the specific attributes of the new package were in

any way responsible for the failure of these small packs? If yes,
identify the specific package attributes which contributed to the

failure
...
2

The Growth of Packaging Usage

There are several factors responsible for the growth of packaging usage
globally
...
Kotler
(1997) reported that in an average supermarket, which stocks
15,000 items, the typical shopper passes by some 300 items per
minute
...
The
package must perform many of the sales tasks
...

(2)

Consumer Affluence: Rising consumer affluence means
consumers are willing to pay a little more for the convenience,

appearance, dependability and prestige of better packages
...
The Campbell Soap
Company estimates that the average shopper sees its familiar red and
white can 76 times a year, creating the equivalent of US$26 million

worth of advertising
...
For example,
toothpaste pump dispensers have captured 12% of the toothpaste
market because, for many consumers, they are more convenient

and less messy
...
3 Legal Dimensions of Packaging
While managing the packaging function, constant attention needs to be
given to the various regulations that the government has laid down in
this respect
...

The most pervasive among these is the regulation relating to the
information a manufacturer is obliged to provide in the package on the
product itself
...
Principal among these are food products,

cosmetics and pharmaceuticals
...

Date of manufacture
...

Maximum retail price including or excluding local taxes
...

Directions for storage
...
4

PRINCIPLES OF MARKETING

Criticisms of Packaging

Packaging is in the socio-economic forefront today because of its
relationship to environmental pollution issues
...


However,

consumers’ desire for convenience conflicts with their desire for a clean

environment
...
This criticism is offset,
to some extent, as packagers increasingly make use of recycled
materials
...
But even in seemingly simple
packaging, beer, for example, half the production cost goes for
the container
...

Health hazards occur from some forms of plastic packaging and

some aerosol cans although government regulations have banned
the use of several of these suspect packaging materials
...
0

CONCLUSION

Packaging is becoming increasingly important as sellers recognize the
environmental pollution issues, as well as the marketing opportunities
involved in packaging
...


Marketing decisions such as those related to pricing and distribution are
not so obviously critical from the customers’ viewpoint, simply because
they is not so aware of them, but the implications of your packaging
decision are obvious since the customer confronts it face-to-face
...
A good packaging must protect the contents stored inside it,
be attractive to the customer, be convenient to handle, store and use and
perform the functions required of it
...
These new packaging materials have
made it possible to market products such as water, beer, foods, and
snacks
...
0

MODULE 2

SUMMARY

In this unit, we discussed packaging, the functions, rationale for
packaging, etc
...


6
...

Explain why
...
0

REFERENCES/FURTHER READING

Akanbi, A
...
(2002)
...
Kaduna: Ayokunle
Printers Limited
...
A
...
Protect your Trademark by Proper Usage,
Journal of Marketing
...

Kotler, P
...

Marketing Management: Analysis, Planning,
Implementation and Control
...
New Jersey: Simon and
Schuster Company
...
J
...
Fundamentals of Marketing
...
Japan:
McGraw-Hill Book Company
...
0
2
...
0

4
...
0
6
...
0

Introduction
Objectives
Main Content
3
...
2
Functions of Label
3
...
4
Arguments for and against Label
3
...
0

INTRODUCTION

Research is ongoing on the development of new products and
improvement on the existing ones
...
These companies have to differentiate their products from
other competitors’ products in the market
...
Label is one of the legal requirements
in identifying one company’s product(s) from other companies’
products
...
This is because it
describes the product, its elements and other details about the product
...


91

MKT201

2
...


3
...
1

Definition of Labelling

•

Labelling is another product feature that requires managerial attention
...
A label may be part of a package, or it may be
a tag attached directly to the product
...
Labels may range from simple tags attached to products to
complex graphics that are part of the package
...


3
...
They include the following:
(1)
(2)

A label identifies the product or brand, such as the crown in
Mercedes cars
...


(3)

A label describes several things about the product – Who made

(4)

it? Where it was made? When it was made? Its content? How it is
to be used? How to use it safely?
A label promotes products through attractive graphics
...


92

MKT201

3
...

(a)

A brand label is simply the brand alone applied to the product or
to the package
...

(b)

A grade label identifies the quality with a letter, number or word
...


Also, Peak milk is

graded Nigeria and Holland made
...


For example, in a descriptive label for a can of corn, there will be
statements concerning the type of corn (Golden Sweet), the style
(Creamed or in Niblet Romels) and the can size, number of
servings, other ingredients and nutritional contents
...
4

Argument For and Against Labelling

Brand labelling creates very little stir among critics
...
The real fight centres on grade
versus descriptive labelling, and whether grade labelling should be
mandatory
...
They also point out that if grade labels were used, prices

would be more related to quality
...
The cost
of grade labelling is very low, so it would not place a greater burden on
the manufacturer
...


A very low score on one grading characteristic can be offset by very
high scores on other factors
...


93

MKT201

MODULE 3

Companies selling products that score high within a given grade would
be hurt by grade labelling
...

Some people also argue that grades are an inaccurate guide for consumer
buying, because the characteristics selected for grading, weights
assigned to them and the means of measuring them are all established on

an arbitrary basis
...


3
...
In 1914, the US Federal Trade Commission Act held
that false, misleading or deceptive labels or packages constituted unfair
competition
...

For example, in the past, the labelling of clothing, furs and piece goods was
often confusing and misleading to the consumer
...
The Wool Products Labelling Act (1940)
provides that a clothing product containing any wool must be labelled
to explain clearly what kind of wool is used (virgin, reprocessed, etc
...
The Fur
Products Labelling Act (1951) provides that in identifying a fur garment,
the label must state the usual or natural name
of the fur and its country of origin
...

The food and drug administration has also established a set of labelling
standards for processed foods to ensure full disclosure of their
nutritional content
...

Vitamin and mineral content must be expressed as a percentage of the
recommended daily allowance
...

It should be noted that this is not exhaustive; there are other legal
considerations/requirements
...
0

PRINCIPLES OF MARKETING

CONCLUSION

Consumers’ desire to satisfy their taste, choice and other marketing mix
elements leads to mass production of goods and/or services by
manufacturers
...


Labelling is one way of differentiating these
...
Therefore, a label must be well designed and shaped
in order to catch the attention of the target and prospective consumers
...
Necessary

legal requirements in respect of labels were exhaustively examined
...
0

SUMMARY

In this unit, we examined label as one of the features of a product and its
planning
...


6
...
Discuss
...
0

REFERENCES/FURTHER READING

Akanbi, A
...
(2002)
...
Kaduna: Ayokunle

Printers Limited
...
(1997)
...
9th Edition
...

Stanton, W
...
(1981)
...
6th Edition
...


95

MKT201

MODULE 3

UNIT 2

PRICING POLICIES AND PRACTICES

CONTENTS
1
...
0
3
...
1
Determinants of Pricing
3
...
3

4
...
0
6
...
0

Pricing Methods
3
...
1 Cost–Plus or Full–Cost Pricing
3
...
2 Pricing for a Rate Returned
3
...
3 Marginal Cost Pricing
3
...
4 Going-Rate Pricing
3
...
5 Customary Pricing
3
...
5
Consumer Psychology and Pricing
3
...
7
Nature and Use of Pricing Discounts
3
...
0

INTRODUCTION

Price is an important element of the marketing mix
...
It is also a direct
source of revenue for the firm
...
However, price should not
be so high as to frighten the customers
...
In general, price directly determines the
quality to be sold
...

This unit examines pricing policies and some strategies adopted by

company executives
...
0

OBJECTIVES

At the end of this unit, you should be able to:
•
•
•
96

state the factors affecting the pricing decision
state the importance and role of cost in pricing
identify the different methods used in pricing

MKT201

•
•
•

PRINCIPLES OF MARKETING

explain how pricing can be used to achieve the objectives at each
stage of the products life-cycle
state the difference in pricing of customer and industrial products
outline how pricing can help position a product in relation to
other competing products
...
0

MAIN CONTENT

3
...
We shall discuss each of these factors separately
...

(a)

Demand

The popular ‘Law of Demand’ states that “the higher the price; the
lower the demand, and vice versa, other things remaining the same”
...
You can test the validity of this law yourself in your daily
life
...
If price rises, demand falls and if the price falls, the demand
goes up
...
If any one
or more of the factors, for instance, income, the price of the substitutes,
taste and preferences of the consumers, advertising, expenditures, etc
...
However, there are important

exceptions to the law of demand
...
When prices of such goods rise, their snob appeal increases and
they are purchased in larger quantities; therefore, their demand falls
...

In the speculative market, a rise in price is frequently followed by larger
purchases and a fall in prices by smaller purchases
...

More important than the law of demand is the elasticity of demand
...
Elasticity

of demand refers to the response of demand to a change in price
...
Let us take
some examples
...
So also
the demand for salt or for that of wheat is not likely to go down even if
the prices increase
...
On the other
hand, a reduction in the price of television will bring in more than a
proportionate increase in demand
...

The concept of elasticity of demand becomes crucial when a marketer is
thinking of lowering his price to increase the demand for his product and
to get a larger market share
...
If the increase in sales is less than proportionate,
his total sales proceeds will decline and his profits will definitely be less
...

It may also be noted that the price elasticity of demand for a certain
commodity and the price elasticity of demand for a certain brand of that
commodity may be radically different
...
The reasons for these are

weak brand loyalty and the availability of substitutes
...
Sellers
operating under conditions of pure competition do not have any control
over the prices they receive
...
The marketer; therefore, needs to know the
degree of pricing discretion enjoyed by him
...


98

MKT201

PRINCIPLES OF MARKETING

S

D

E

(Pri ce )

P

D

S
Q

Quantity
Fig
...
e
...
If
he wants to charge a higher price, buyers will purchase from other
sellers
...

Under a monopoly, a single producer has complete control of the entire
supply of a certain product
...
The main features of a monopoly are (i) there is only one
seller of a particular good or service and (ii) rivalry from the producers
of substitutes is so remote that it is almost insignificant
...
Thus, he is in the

position of a price setter
...
Much depends on the elasticity of

demand for the product
...
And in most cases, there is

rather an infinite series of closely competing substitutes
...
The closer the
substitute and greater the elasticity of the demand for a monopolist’s
product, the less he can raise his price without frightening away his

99

MKT201

MODULE 3

customers
...

Monopolies are constantly reducing due to the following reasons:
1)
2)
3)
4)

shifts in consumer demand
continuous process of innovation and technological developments
leading to development of substitutes
lack of stimulus to efficiency provided by competition
entry of new competitors Intervention by governments
...
The
automobile, cement, tyre, infant food, dry batter, tractor, cigarette,
aluminium and razor blade industries provide examples of oligopolies
...

Each oligopolist realises that any change in his price and advertising
policy may lead rivals to change their policies
...
In such cases, there is a strong tendency towards close
collaboration in policy determination in regard to both production and

prices
...

Oligopolistic industries are usually characterised by what is known as
price leadership – a situation where firms fix their price in a manner
dependent upon the price charged by one of the firms in the industry,

called the price leader
...
Price leaders with the strongest position in the
market may often increase their prices with the hope that competitors
will follow suit
...

Monopolistic competition is a market situation, in which there are many
sellers of a particular product, but the product of each seller is in some
way differentiated in the minds of consumers from the product of every
other seller
...
At times, one manufacturer may

differentiate his/her own products
...
This differentiation of products by each manufacturer
by giving it a brand name gives him some amount of monopoly if he is
able to create goodwill for his products and he may therefore be able to
charge higher prices to some extent
...
If he charges too high a price, consumers may
shift their loyalty to other competing suppliers
...
are subject to a large

degree of product differentiation as a means of attracting customers
...
The

differences, real or illusory, may be built up in his or her mind by
(a)
(b)
(c)

recommendations by friends,
advertising and
his own experience and observation
...


Product differentiation is more typical of the present day economic
system, than either pure competition or monopoly
...
It tries to

maintain its position and promote its sales by either
a)
b)
c)

changing its price and indulging in price competition, or
intensifying the differentiation of its product, and /or
increasing its advertisement and sales promotion efforts
...
It is because the cost
data constitute the fundamental element in the price setting process
...
For setting prices, apart from costs, a
number of other factors have to be taken into consideration
...
An

increase in price is possible, even without any increase in costs
...
The product is
tailored to the requirements of the potential consumers and their

101

MKT201

MODULE 3

capacity to pay for it
...
And now a single

wave band radio is available at about N100
...
Yet the fact remains that the prices are quite close for a
somewhat similar product
...

Price decisions cannot be based merely on cost because it is very
difficult to measure costs accurately
...
The management has to assume some desired
price and volume relationship for determining costs
...
It is not possible to determine costs without having an idea
of what volumes or numbers can be sold
...

All this discussion does not purport to show that costs should be ignored
altogether while setting prices
...
In fact, in the long run, if costs are not covered,
manufacturers will withdraw from the market and supply will be
reduced which, in turn, may lead to higher prices
...
Cost must be
regarded only as an indicator of the price, which ought to be set after
taking into consideration the demand, the competitive situation, and

other factors
...
Cost calculations may also help in determining whether the
product, whose price is determined by its demand, is to be included in

the product line or not
...
of units manufactured
50,000
45,000

102

Cost Price per unit (N)
450
470

MKT201

PRINCIPLES OF MARKETING

55,000
60,000
70,000

100,000

440
430
420
400

Considering the price levels and expected sales mentioned earlier in
Exercise 1, what would be the optimal price under above behaviour

situation?

3
...
These methods are:
1)
2)
3)
4)
5)

Cost–plus or Full–cost pricing
Pricing for a rate of return, also called target pricing
Marginal cost pricing
Going rate pricing, and
Customary prices
...
The last two methods are competition-oriented, as the

prices here are set on the basis of what competitors are charging
...
2
...
Under this method,
the price is set to cover costs (materials, labour and overhead) and a
predetermined percentage for profit
...
This may reflect differences in competitive intensity,
differences in cost base and differences in the rate of turnover and risk
...

What determines the normal profit? Ordinarily margins charged are
highly sensitive to the market situation
...

Mark–ups may be determined by trade associations either by
means of advisory price lists or by actual lists of mark–ups
distributed to members
...
These margins are considered ethical as well as
reasonable
...


b)

It fails to reflect the forces of competition adequately
...

c)

Any method of allocating overheads is arbitrary and may be
unrealistic
...
The situation
becomes more difficult in multi-product firms
...


Explanation for the widespread use of Full–cost Pricing
A clear explanation cannot be given for the widespread use of full–cost
pricing, as firms vary greatly in size, product characteristics and product
range, and face varying degrees of competition in markets for their

products
...


2

Firms preferring stability, use full-cost as a guide to pricing in an
uncertain market where knowledge is incomplete
...


3

In practice, firms are uncertain about the shape of their demand

curve and about the probable response to any price change
...

4

Fixed costs must be covered in the long run and firms feel
insecure if they are not covered in the long run either
...
When products and production processes are
similar, cost-plus pricing may offer a source of competitive
stability by setting a price that is more likely to yield acceptable
profit to most other members of the industry also
...


7

Cost-plus pricing is especially useful in the following cases:

a)

Public utilities such as electricity supply, and transport, where the
objective is to provide basic amenities to society at a price which
even the poorest can afford
...
e
...
The selling price may be
determined by government, as in the case of certain drugs,
cement, and fertilizers
...
This approach

takes into account the market realities by looking from the
viewpoint of the buyer in terms of what he wants and what he
will pay
...
The basis of
pricing is estimated cost plus gross margin that the firm could
have got by using facilities otherwise
...
They may make the products
themselves if they do not like the price
...


3
...
2 Pricing for a Rate of Return
An important problem that a firm might have to face is one of adjusting
the prices to changes in costs
...

Revise prices to maintain profits as a constant percentage of total
sales
...


The various costs are given below:
Variable Costs

Materials
Labour

N360,000
N420,000

Fixed Costs

Overhead
Selling & Administrative charges

N120,000
N180,000

Total investment in cash, inventory and equipment

N800,000

Suppose the labour and materials cost increases by 10 per cent
...

The above data reveal that costs are N1,080,000
...
1

1,080,000
2

Percentage on Sales

120,000
1,200,000

=

10

3

Percentage on Capital employed

120,000
800,000

=

15

The revised costs are N1,158,000 (N1,080, 000 + 36,000 + 42,000)
According to the first formula, we have to earn a profit of 11
...
Our revised profits should be #128,667 and sales volume on

this basis would be N1,286,667
...
87 per unit
...
If

sales are (S), the profit would be S/10 and cost would be 9S/10
...

If 9S/10 = N1,158,000 then S = N1,286,667
Therefore, the price per unit is N12
...


106

MKT201

PRINCIPLES OF MARKETING

Under the third formula, we assume that the capital investment is the
same
...
The sales value would then be N1,278, 000 and the selling price

per unit would be N12
...

Rate of return pricing is a refined variant of full-cost pricing
...
it tends to ignore demand and fails to
reflect competition adequately
...


3
...
3 Marginal Cost Pricing
Under full-cost and rate-of -return pricing, prices are based on total costs
comprising fixed and variable costs
...
The firm uses only those costs that are directly attributable to the

output of a specific product
...
Unless the
manufacturer’s products are in direct competition with each other, this
objective is achieved by considering each product in isolation and fixing

its price at a level, which is calculated to maximise its total contribution
...


With marginal cost pricing, prices are never rendered
uncompetitive merely because of a higher fixed overhead
structure
...


2
...
An
aggressive pricing policy should lead to higher sales and possibly
reduced marginal costs through increased marginal physical
productivity and lower input factor prices
...


3
...
The total costs of separate products can never be
estimated satisfactorily, and the optimal relationships between
costs and prices will vary substantially both among different
products and between markets
...
There is a series
of short runs
...

Limitations
1
...
Such business may have
to be foregone because of inadequate free capacity, unless there is
an expansion in organisation and facilities, with the attendant
increase in fixed costs
...


In a period of business recession, firms using marginal cost
pricing may lower prices in order to maintain business and this
may lead other firms to reduce their prices, leading to cut-throat
competition
...


In spite of its advantage, due to its inherent weakness of not ensuring the
coverage of fixed costs, marginal cost pricing has usually been confined

to pricing decision relating to special orders
...
2
...
The firm adjusts
its own price policy to the general pricing structure in the industry
...
Many cases of this type
are situations of pricing leadership
...


108

MKT201

PRINCIPLES OF MARKETING

It must be noted that ‘going-rate pricing’ is not quite the same as
accepting a price impersonally set by a near perfect market
...
It prefers,

however, to take the safe course and conform to the rice of others
...
2
...
With such goods, changes in costs are
usually reflected in changes in quality or quantity
...

Customary prices may be maintained even when products are changed
...
This is usually so even in the face of

lower costs
...
Perhaps, going with

the prices as long as possible is a factor in the pricing of many products
...

Another possible way out, especially when an upward move is sought is
to test the new prices in a limited market to determine the consumer

reaction
...
3

Objectives of Pricing Policy

Before a marketer fixes a price, he should keep in mind certain basic
considerations
...
For example, it may be necessary to reduce the price to
offset the probable loss of sales from a lower advertising budget or to

enable fuller utilisation of plant capacity more quickly
...

Your price should not be so high that it attracts others to compete with
you
...

If a marketing manager is to make effective pricing decisions, he should
be clear about the firm’s long-term marketing objectives for the entire
range of products and services
...
If it is
interested in short-term profitability, it may have a higher price even at
the expense of sales volume and market share
...

Advertising and Stronger Support Increased
Advertising
and
Promotion
Publicity budget = Price increase
or lower profit
Distribution
Additional Selling Possibly higher Distribution costs
points
(margin increase)
Consumers/Users General
Increase Advertising and Publicity
Acceptance
effort
...
4

J
...
Ward (Editor), (1985)
...
Geneva: International Trade Centre
...
In a
particular situation, the behaviour of one individual may not be the same
as that of the other
...


2
...
It is easier to speculate about what consumers would
do if prices rose by 5 per cent than if the quality improved by 5
per cent
...
Above a particular price, the article is
regarded as too expensive and, below another price, as
constituting a risk of not giving adequate value
...

Balsara, manufacturers of ‘Odonil’ and ‘Promise’ realised that
pricing a product too low could adversely affect its sales by
creating a credibility problem
...

3
...

There are two reasons for this:

(a)

It needs expert knowledge and appropriate equipment to test the
quality or durability of some particular products (to say nothing

of the time and cost involved in carrying out a proper test)
...
What is costly is thought to be of high
quality
...
It is very difficult to
convince people that something cheap is of good quality and that
something expensive is of poor quality
...
This is especially true of
durable consumer goods which are very often differentiated, at
least psychologically, through branding, packaging and
advertising
...


(ii)

The higher price creates confidence in the customer that he/she is
getting good quality
...
This

price quality association is well established
...
An improvement may, therefore, lead to an
increase in demand
...
This extreme situation
may arise if price in increasingly affluent societies comes to serve

merely as an indicator of quality
...
A firm’s size, its financial success, and even its age are

often perceived by consumers as measures of quality
...

(vi)

In a comprehensive survey of consumer consciousness, it was
revealed that the basic postulate of the demand theory, i
...
, the
consumer has an appropriate knowledge of market prices, was

not fundamentally wrong
...

In fact, higher prices that increase consumer readiness to buy may sound
uneconomic, but may not be unrealistic
...
The lesson from this discussion
is that the producer has considerable flexibility in pricing his products,

provided he can create a psychological image of quality
...
2

Nature and Use of Price Discounts

There are two popular types of discounts:
1)
2)

Quantity discounts
Cash Discounts
...
Quantity discounts may be related to the size of the order
being measured in terms of physical units of a particular commodity
...

However, this method is not possible in case of heterogeneous

commodities which are hard to add in terms of physical units or truckload
...
Here, quantity discounts are based upon the money value of the

quantity ordered
...

Quantity discounts based on physical units become important where cost of
packing is a significant factor and orders of less than standard
qualities, say, less than a case of 6 pressure cookers, may involve higher
packing charges per cooker since the space remains unutilised
...


112

MKT201

PRINCIPLES OF MARKETING

In some cases, quantity discounts may be based on the cumulative
purchases made during a particular period, usually a year or a season,
e
...
Christmas discounts may be given on the basis of cumulative
purchases made during the Christmas season spread over October to

December
...
Quantity

discounts can facilitate economic size order in three ways:
1

A given set of customers is encouraged to buy the same quantity
but in bigger lots
...


3

Small size purchasers may be discouraged and bigger size
customers may be attracted
...

Quantity discounts are most useful in the marketing of materials and
supplies but are rarely used for marketing equipment and components
...

An example of discount can be 2 per cent off if paid in ten days, full

invoice price min 30 days
...

Cash discount is a convenient device to identify and overcome bad
credit risks
...
If a buyer decides to purchase goods on credit, this
reflects his weak bargaining position, and he has to pay a higher price by

foregoing the cash discount
...
However, allowing
discounts may involve paying 36
...

On the basis of 2 per cent off if paid in 10 days, full involve price in 30
days, the seller’s cost comes to 36
...
5 per cent per
year)
...

Thus, it is the reduction in collection expenses and in risks rather than

113

MKT201

MODULE 3

savings on interest, which should be the guiding consideration for cash
discounts
...
3

Product Positioning and Price

By ‘positioning’ we mean the way a product is viewed by the customers
in comparison with similar products
...
A
toilet soap meant to be a novelty to attract the elite must be sold at a

higher price
...
e
...

Pricing is an important element of the marketing mix
...
Before making
any pricing decision it is important to understand all these factors
...
The four most commonly used
methods are full cost pricing, pricing for rate of return, going rate
pricing, and customary pricing
...
While from the company’s point of view, price represents a kind
of ‘maximum’ that it can charge given its own costs and nature of
competition, from the costumer’s viewpoint it is a representation of

quality of the product
...
0

CONCLUSION

Pricing policies are considered one of the most marketing mix elements
...


The importance attached to the price of a company’s product by the
consumer is of significant importance to the marketing activities
...


114

MKT201

5
...


6
...


Let us assume that consumer behaviour in terms of units bought
of this manufacturer is as follows:

•

Price
22
21
20
23
24
25

No
...
0 REFERENCES/FURTHER READING
Boone, Louis E
...
(1986)
...

Chicago: The Dryden Press
...
(2000)
...
New Delhi: Prentice-Hall
...
; Paul, Samuel & Gupta, G
...
(1985)
...
New Delhi: Tata, McGraw-Hill Publishing

Company Limited
...
0
2
...
0

4
...
0
6
...
0

Introduction
Objectives
Main Content
3
...
2
How Communication Influence the Role of Promotion in
Market?
3
...
4
Determining the Promotion Mix
3
...
0

INTRODUCTION

The word ‘communication’ is based on the Latin word meaning
‘common’
...
In marketing, communication has a very
important place
...
Marketing communication is more commonly called

‘promotion’ and constitutes one of the Ps of the marketing mix
...
Notwithstanding the continuing
debate, whether promotion is the first element of the marketing mix or
the last, the fact remains that sound management of the marketing
function is dependent on effective management of its promotion
function
...
to mention
only a few
...

With growing competition in the market, as well as the customers
becoming better informed and more choosy, it is imperative now that
marketing communications of the right kind only are made to the right
group of target buyers
...

116

MKT201

2
...


3
...
1

How Communication Works

•
•
•
•

We know by now that communication, simply speaking, is sharing of
information between the two parties
...
The process of communication begins when one party
(called source, sender or communicator) wishes to communicate with
another party (the receiver)
...
The various elements of a typical communication process

are given in Figure 1
...
1:
Elements of the Communication Process
Source: (1) Phillip Kotler, Marketing Management – Analysis,
Planning and Control, and (2) Ralph M Gaedeke & Danish, M
...
Marketing: Principles and Applications
...
The effectiveness of the communication process, therefore, is
dependent upon the level of congruity and compatibility obtaining
among the various elements of the communication process, i
...
, between the
sender and the message, the message and media, the media and the
receiver, and so on
...


2)

Not much different was the fate of an advertising campaign of a
leading US detergent marketer who while extending the
campaign to the vernacular press of the Middle East, erred in not
reversing the direction of the visuals used, to make these
compatible with the right to left reading characteristic of the

118

MKT201

PRINCIPLES OF MARKETING

media
...


3
...

Motivating the adoption of the promoted product as well as effecting the
desired change in the consumer behaviour are the goals of the promotion
function
...
While there are many models that help to
conceptualise the buying process, two very specific models that aid in
understanding the buying process as well as in framing communication

are: ‘AIDA’ and ‘Hierarchy-of-effects’ models
...
According to AIDA model, a marketer
should begin by winning attention or gaining awareness, creating
interest, inspiring desire and precipitating the action for purchase, in the
prospects in order to enable its product to be adopted by the target

public
...

The basic implication of these models is that the function of persuasive
communication or promotion should be handled deftly at every stage of
the buyer’s adoption process
...


119

MKT201

MODULE 3

Hierarch – of – effects stage
(movement toward purchase)

Awareness

Promotion that might be relevant
to various stage

Teaser Campaigns
Jingles and Slogans
Classified advertisement

Knowledge

Point – of – Purchase display
publicity
Informative or descriptive
advertisement

Liking
Preference

Status or glamour appeals
Demonstration
Image advertisement
Comparative advertisement
Testimonials

Conviction

Coupons, discounts, other incentives

Points – of – purchase displays
Retail Store advertisement

Purchase

Fig
...
Lavidge and Gary A
...
61, Quoted in Ralph M
...
Tootelian
...
385
...
3

The Promotion Mix

In our daily life, we all are exposed to various tools of promotion aiming
at communicating one thing or the other to us
...
At a retail shop, these take the shape of traffic builders, product
displays, streamers, hangers, bins, etc
...

Listed above are just few types of the various promotion tools available
to a marketer
...
These are: advertising, personal

120

MKT201

PRINCIPLES OF MARKETING

selling, sales promotion and publicity
...
It includes the use of such

media as magazines, newspaper, outdoor posters, direct mail novelties,
radio, television, bus posters, catalogues, directories, programmes and

circulars
...

Sales Promotion
Those marketing activities, other than personal selling, advertising, and
publicity, that stimulate consumer purchasing and dealer effectiveness
such as non–routine selling efforts
...

Publicity
Non-personal stimulation of demand for a product, service or business
unit by generating commercially significant news about it in published
media or obtaining favourable presentation of it on radio, television, or stage
...


121

MKT201

Table 1:

MODULE 3

Relatives Advantages and Disadvantages of Promotion
Components

Promotional
Component
Advertising

Scope
Mass

Personal
Selling

Personal

Sales
Promotion

Mass

Publicity

Mass

Cost
Advantages
Relatively
Allows
inexpensive expressive-ness
per contract and control over
message
Expensive
Permits flexible
per contract presentation and
gains immediate
response
Can be
Gains attention
costly
and has
immediate effect
to imitate
Inexpensive Has a high
degree of
credibility

Disadvantages
Hard to measure
result

Costs more than
all other forms
per contact
Easy for others

Not as easily
controlled
as
other forms

Source: Adapted from David J
...

Marketing, Dryden, P
...

Although definitions vary about the number of components that
constitute promotion, marketing practice shows that almost all
marketing activities influence the promotion function
...
By incorporating creativity in its design, a
package can add the ‘pick-me-up appeal to the product and also help to
communicate its features, uses and benefits more effectively
...

Public relations, likewise, performs an important role in promotion
insofar as it helps to create a favourable image of the firm and allows the

public to experience better satisfaction in dealing with the firm
...


123

MKT201

PRINCIPLES OF MARKETING

SELF-ASSESSMENT EXERCISE 2
In what ways has Marketing Communication influenced your choice of
consumption?

3
...
They make use of
two or more methods to accomplish promotion and marketing
objectives
...
For example, while TV spots, newspaper and
fashion magazine advertisements, and attractive festival displays at the
authorised retail shops constitute the promotion mix of textile fabrics
specialised industry magazines and participation in national and
international exhibition of clothing materials and cosmetics goods may

constitute the promotion for women generally
...
The promotion mix, therefore,
acquires the dimension of dynamism and varies from product to product
over a period of time
...
The task involved is
rather more complex due to cross-substitutability of the various
promotion methods (i
...
each method is capable of achieving what the
other method may achieve) thereby making the measurement of
promotional effectiveness more difficult
...

Type of Product
In terms of the promotion task involved, the type of product is the
major influence on the promotion–mix
...
Newspaper and magazine
advertisements, TV spots and Cinema Slides, offer of incentives

122

MKT201

MODULE 3

to consumers and organisation of contests will, therefore,
constitute the ‘promotion mix’ of such consumer goods
...
Personal selling, quite obviously,
becomes indispensable for such a product along with organising
product demonstrations and exhibitions, holding seminars, etc
...
Publicity, however, to the extent
that it projects the desired image of the company, plays a more

important role
...
For example, if the target audience
of a consumer product is both large as well as widely dispersed in
different parts of the country such as soft drink like Coca–Cola,

Pepsi–Cola, and double cola, advertising and sales promotions
emerge to be both more effective and economical promotional
methods than the others
...


Personal selling also has a role to play among consumer goods
companies but limited mainly to wholesalers and retailers who
receive greater focus for activities such as pushing inventories,
conducting displays, etc
...
For example, when the
product is in the introduction and early growth stages, and the tasks
involved are that of building and motivating trials of the
product, the promotion mix comprises publicity, informative
advertising, consumer sales promotions and trade deals
...


4)

The Available Budget
Each method of promotion has certain costs associated with it
...
Firms with small promotional budgets have to be
content with more localised area activity, using dealer displays,
wall writings, personal selling, and other less sophisticated
methods
...

5)

Company Policy
In the final analysis an aggressive consideration of the above four
determinants of the company’s own marketing and promotion
policy determines the mix
...
For example,
a company even under the seller’s market might still believe in
keeping a high profile in public and thus may go for extensive
publicity and advertising programmes
...


SELF-ASSESSMENT EXERCISE 3
What promotion mix would you suggest for each of the following
products? Assume you have a large budget
...

i
...

iii
...


Chewing–gum
Colour Television
Sports Footwear
Light Commercial Vehicles
...
6

The Promotion Budget

As we noted above, the promotion budget influences the level of
promotional activity as well as the promotion mix used by the firm
...
Pending any clear-cut relationship between the promotion
expenditure and the achievement of promotion objectives, some

decisions are made based on the rules of the thumb
...
Often such a minimum

125

MKT201

•

MODULE 3

level of promotion is set by the competitor or more appropriately
by an average of the industry
...


The above discussion should not, however, lead us to understand that no
attempts have been made to shed light on the inherent uncertainty
shrouding the cause–effect relationship in this area of promotion
budgeting
...
The substance of their
findings is that results of the promotion function should be constantly
monitored in order to establish more reliable parameters of cost–benefit
relationship
...
These methods include per cent-of-sales method, fixedsum per unit, affordable funds, competitive parity, and objective and

task method
...

Such sales may relate to the previous year, an average of sales of the

previous few years, projected sale of the next year or years, or an
average of the previous few years sales, as well as the projected sales of

the next years
...
Particular difficulties are faced if the sales curve of a
company is not smooth, hence resulting in lower outlays for the years
that follow the bad sales years
...
The way out attempted has been the adjustment provision of a
fixed percentage to the average expenditure of the past (i
...
last year plus
15%), or use of this method in combination with the

others that are discussed below
...
The only differentiating point of this method from the per

126

MKT201

PRINCIPLES OF MARKETING

cent-of-sales method is that the base for budgeting, instead of being
naira sales, is the number of product unit sold or targeted to be sold
...

Affordable Funds
Continuing to think on the plan that promotion expenditure is one of
those business costs which are desirable or avoidable as per the
convenience of the top management, the funds for promotion are
appropriated on a discretionary basis under this method
...

Competitive Parity
Incorporating a measure of competitiveness in planning, this method
guides the budget determination in terms of relativity to what the
competitors are likely to allocate
...

Objective and Task Method
This is one of the most scientific methods of budget determination
...
It then identifies the tasks involved in achieving the said
objectives followed by ascertaining the costs involved in the
performance of each task required
...
Typical objectives might be to increase awareness say by 15% or

increase message/theme recall say by 25%
...

This method presupposes that objectives set are realistic and promotion
results can be measured precisely
...
It is as a result of the continuing research that some models for

127

MKT201

MODULE 3

promotion budgeting have been developed and are now being refined to
be of practical utility to marketers
...
The research into the practices of
companies in Nigeria in this regard revealed the above finding
...
There were,
however, quite a few companies which had started using the approach of
‘objective and task’ in setting their promotion budget either exclusively
or in combination with other methods
...

The practices of the companies using a combination of methods for
determining the promotion budget pointed to the efforts they were
putting in together with competitive promotion outlay and its

apportioning to various promotion components
...
0

CONCLUSION

Communication deals with sharing of information
...
The marketing techniques used to communicate
with existing and potential customers are called promotion
...
Packaging, public
relation and other elements of the marketing mix supplement the

promotion efforts of the marketer in their own way
...
The
determination of the promotion mix is influenced by factors such as type
of product, nature of market, stage of product in the product life-cycle,
the available budget and company policy
...
e
...

The promotion budget is set by using one or more of the following
methods: per cent-of-sales, fixed-sum per unit, affordable funds,
competitive parity and objective and task method
...
Marketing communications being
persuasive in nature and aiming inter alia at affecting the desired
behaviour in the consumer should be skillfully managed
...


5
...
It was noted that with the growing
competition in the market place as well as the customers becoming
better informed and more choosy, it is imperative that these days that
marketing communications of the right kind only are made to the right
group of target buyers
...
However, marketing communications being
persuasive in nature and aiming inter alia at affecting the desired

behaviour in consumer should be skillfully managed
...
0

TUTOR-MARKED ASSIGNMENT

In setting a promotion budget, the objective and task method is referred

to as the most logical
...
0

REFERENCE/FURTHER READING

Kotler, P
...
Marketing Management: Analysis, Planning and

Control
...


129

MKT201

MODULE 3

UNIT 4

ADVERTISING AND PUBLICITY

CONTENTS
1
...
0
3
...
0
5
...
0
7
...
1
How Advertising Works
3
...
3
Role of Advertising
3
...
5
Selecting and Scheduling Media
3
...
0

INTRODUCTION

In modern times advertising prevails in all walks of life
...
You would recall that advertising was
defined as any paid form of non-personal presentation and promotion of
ideas, goods or services by an identified sponsor
...
Before
going to the role of advertising, let us acquaint ourselves with how
advertising works and what are the various types of advertising
...


2
...


First,

MKT201

PRINCIPLES OF MARKETING

3
...
1

How Advertising Works

In order to perform the various marketing and communication functions
listed above, according to Paul E
...
Gerald, advertising moves through

the following stages before accomplishing its purpose:
•
•
•
•
•
•
•
•
•

It gets planned and brought into existence
It is reproduced and delivered and exposed to people
It is received and assimilated
It affects ideas, intentions and attitudes
It affects buying and the buying process
It responds to time (situation and repeated expose)
It affects trade effort and supply
It changes sales and profits
it changes the market (size, quality mix, intensity of competition,
trade relations, consumerism, etc
...
2

Types of Advertising

Depending upon the nature of the task involved, type of product
represented or the focus of activity transacted, advertising efforts are
grouped into various types
...
Advertisements
for machinery and machine tools form part of industrial advertising,
and the ones for footwear, cornflakes or edible oil, form consumer
advertising
...
Likewise, advertisements promoting the
consumption of tea or carpets are called primary demand creating
advertisements whereas those relating to say spare parts and coffee are
selective brand advertising
...
The advertisements which are sponsored and paid for by
the manufacturers are
manufacturer
advertising, and such
advertisements whose costs are shared by the manufacturer and
wholesales or retailers are
co-operative advertising
...
On the other
hand, when a retailer advertises for his shop entirely on his own, to

attract traffic to his shop it is retail advertising
...


3
...
A quick
flavour of the arguments put forward on both sides can be had from
Table 14
...
The table presents two viewpoints, one considering
advertising as an information disseminating utility function and the

other viewing advertising as a source of market power
...
Phillip Kotler very aptly refers to the
following situations where advertising is likely to make greater

contribution
...


Are there some limitations to the role of advertising? The answer is
obviously is in the affirmative
...


Stansfield, cannot do the following:
•
•
•
•
•
•
•

Sell a bad product twice
...

Sell a poorly distributed product
...

Sell products to persons having no use for them
...

Do the selling job alone
...
While Yugoslavia,
USSR, Poland and Hungary shed their hostility to advertising quite a
few years ago, China is welcoming advertisements propelled marketing

now
...
4

Advertising Management

Advertising constitutes one of the four components of a firm’s
promotion mix, which in turn forms an integral element of the firm’s
marketing mix
...

In particular, the link of advertising with the promotion and marketing
objectives of the firm on the one hand, and with factors like product
positioning objectives, role of sales force, dealer support plan and the
buying habits of consumers, on the other hand, must be clearly
established
...
The task involved in advertising is, therefore, complex and

its management requires systematic decision-making
...
Advertising Research: The State
of the Art Association of National Advertisers, pp
...

New York
...


3
...
Though advertising is largely informative and persuasive in
nature, yet to do a good job, the objectives of each advertising campaign
need to be clearly spelt out in measurable terms, in order to focus clearly
on the target audience, and on the period over which these are to be

achieved
...
Colley called for the need to provide an explicit link between
advertising goals and advertising results in his pioneering approach
nicknamed DAGMAR - Defining Advertising Goals for Measured
Advertising Results
...


Some of such goals are as follows:
•
•
•
•
•
•
•

announce a special reason for ‘buying now’ (price, premium and
so on)
build familiarity and easy recognition of the package or
trademark
place advertiser in position to select preferred distributors and
dealers
persuade prospect to visit a showroom, ask for a demonstration
build up the moral of company sales force
correct false impression, misinformation and other obstacles to
sales
implant information or attitude regarding benefits and superior
features of brand
...
Advertising goals should, therefore, be specific to the

communication task(s) to be performed
...

Further, let us also understand that improving sales is not the only
objective of advertising
...
Also, the impact of advertising
often occurs over the long run and not necessarily immediately, since
consumers may belong to different stages of the product adoption

process at a point in time
...


SELF-ASSESSMENT EXERCISE 2
State the main objectives of advertising
...


3
...

The crucial aspect of publicity is that it should emanate from a neutral and

impartial source such as editorial material and is not paid for by the sponsor
...
Publicity and public relations have a

lot in common
...

Uses of Publicity
Publicity, which is essentially aimed at building position image,
goodwill or favourable visibility, has acquired a sound footing to assist a
company in its marketing efforts
...

SELF-ASSESSMENT EXERCISE 3
Before you proceed, list the uses of publicity
...
Both periodic surveys as
well as before and after-event surveys can be conducted to gauge the
level of exposure, awareness and the type of opinions and attitudes held

by public
...


4
...

It makes use of various types of media to reach the target public in a

short time
...

Measurement of effective advertising requires that the process be
initiated by setting of measurable and realistic goals
...
This should be followed by selection of
appropriate appeals, proper illustrations and unique copy themes in the
language, which the audience understands and should be transmitted to
them through media vehicles, which have a meaningful reach and

desired credibility
...
e
...
Organisation of newsworthy events and
good relations with media can help
...


5
...
It has
been reported that some of the major marketing and communication
functions performed by advertising today include informing, entertaining,
persuading, etc
...
In this unit, we
examined how advertising works, types of advertising, as well as uses of

publicity
...
0

TUTOR-MARKED ASSIGNMENT

i
...


List and explain four types of advertising
...


7
...
& John, G
...
Advertising Management
...

Burnett, John J
...
Promotion Management: A Strategic Approach
...

Capel, John (1977)
...


England-Cliffs: Prentice Hall Inc
...
0
2
...
0

4
...
0
6
...
0

Introduction
Objectives
Main Content
3
...
2
Types of Selling Jobs
3
...
4
Sales Promotion
3
...
6
Sales Promotion Methods
3
...
0

INTRODUCTION

In contrast to advertising and publicity, which use impersonal methods
of communication, personal selling makes use of direct personal
communications to influence the target customers
...

It is one of the oldest methods of business promotion
...
Though, it is the most expensive method of
promotion, yet we see an increasing number of firms making use of it,

and a good number of them realise that they cannot, perhaps, live
without it
...
Sales promotion is the only method that makes use of
incentives to complete the push-pull promotional strategy of motivating

the sales force, the dealer and the consumer in transacting a sale
...
0

PRINCIPLES OF MARKETING

OBJECTIVES

On completion of this unit, you should be able to:
•
•
•
•
•
•

explain the nature and role of personal selling and sales
promotion
list different types of sales position and sales promotion schemes
describe the steps involved in the selling process
explain the growing importance of sales promotion in Nigeria
...


3
...
1

Role of Personal Selling

Personal selling is defined as ‘Oral presentation in a conversation with
or more prospective purchasers for the purpose of making sales’
...
It,
therefore, carries the distinctive advantage of flexibility in terms of
tailoring the sales presentation to the needs of the buyer
...
These two unique
advantages make personal selling the most result-oriented promotion

method
...
Therefore, personal selling is used extensively in the case of
industrial goods, where the salesperson performs functions such as
assisting the customer in designing the product specifications, product
installation, product commissioning, solving technical problems through
providing service after sales and helping the customer to have optimal
ultilisation of the product
...
The scope of the tasks performed include obtaining periodic
orders, ensuring supplies, offering tips to dealers on product display and
attaining desired levels of stock movement
...


139

MKT201

MODULE 3

Notwithstanding the varying role of personal selling in the strategies
followed by different companies, the nature of the selling function

requires that the following tasks be performed:
•
•
•

•

Sales generation
Feedback and market information collection
Provision of customer service covering aspects such as delivery
of goods, warranty administration, timely availability of repair
and spares, etc
...


In practice, the complexity of the selling task actually performed varies
from company to company even under the above four categories
...
Name two advantages personal selling have

over other kinds of promotion
...
2

Types of Selling Jobs

From the foregoing discussion, we understand that while sales as a
function has a common purpose that is to effect sales the selling
situations differ due to the interplay of various factors
...
These factors require
the sales force to possess different traits and abilities suitable to the
selling situation with which they are associated
...
McCurry in ‘The Mystique of Supersalesmanship’ classifies individual sales positions based on the degree of
creativity required into seven categories
...

Merchandise Deliveries
This is the sales person, whose primary job is to deliver the product

usually against routine orders, popularly called sales and delivery boys
...
Such type of salespersons are popularly called retail

salesman
...

They normally do not use the hard selling approach for making orders
...
Strictly

speaking, missionary salespersons are not permitted to take orders
...

This type of salesperson is popularly called Technical Salesperson, e
...


Computer salesman
...
The job involves abilities to persuade and

convince the customer
...
, the
common factor being difficultly in immediate demonstration of the
perceived benefits of the product
...

Defining the Salesperson’s Job
The foregoing classification of the sales position into seven categories,
on the basis of degree of creativity required in the performance of each
job is only general in nature
...
It should broadly specify
how much of the salesperson’s time should be spent on developing new
accounts versus servicing existing accounts, large accounts versus small
accounts, bulk order versus small orders, selling individual products
versus selling products line, selling old products versus selling new
products, etc
...
To avoid this type

141

MKT201

MODULE 3

of loss in productivity of the sales force, it is worth repeating that the job
of a salesperson should be defined with sufficient specificity, so that

he/she can use it as a guideline to stay in the right direction
...
3

The Selling Process

Up to this point, we have been discussing the role of personal selling
and the degree of creativity required in a salesperson to perform the task

satisfactorily
...
Though the steps in the selling process discussed below will be
applicable to most of the selling situation, what will differ will be the
degree of importance given to each steps of the process under different

selling situations
...
A salesperson must become accomplished at performing the selling

steps
...


Resources customers on the correctness of their decision
...

Make certain product is properly installed, used and served
...

Don’t be afraid of being rejected
...

Avoid arguments
...
Know your customer
...
Know your company

Fig
...
Gaedeke & Dennis H
...
e
...
In short, he should be

well equipped with the fundamentals of selling
...
Prospects can be located
through (1) identifying the potential of buying more in the existing
customers, (2) recommendations of existing customers, (3) winning
back lost customers, (4) attracting competitors’ customers, (5)
customers’ information request from advertisement, (6) newspaper
announcements, (7) public records, (8) directories likes telephone, trade
associations etc
...

The located prospects should first be qualified broadly in terms of (i)
whether they want the product and how intense their want is, (ii)
whether they have the adequate purchasing power, and (iii) whether and who
possesses the power or authorisation to purchase and spend the
required money
...

It is worth mentioning here that the ability to prospect is the most
essential ability of a successful salesperson
...

Step 3
Pre-approach: The qualifying process of separating prospects from
suspects further requires that the salesperson should posses detailed
information relating to the prospects in terms of existing products
consumed, their scale of operation, product range, their buying size,
frequency, budget and the process, etc
...
The sources of information for the purpose include company
annual reports, other salespersons, other suppliers to the prospects,
census of manufacturers, professional journals, newspapers and market

143

MKT201

MODULE 3

intelligence
...

Step 4
Approach: ‘First impression counts
...
This step has two distinct parts
...
For the former, referrals of reliable persons known to prospects,
calling after fixing an appointment, use of door openers, help
...

Step 5
Sales Presentation:

Through advance information relating to the

prospect, every effort should be made to match the product offered to

the needs/problems faced by the customer
...
How can this be done? Use of key benefit or a problem
solver, or a unique act of the salesperson results in gaining attention
...

The presentation should proceed in a straightforward manner to help the
prospect know that you understand his problem and that is the reason of
your being there
...
The overall approach
should be to build credibility and confidence in the supplying company,
its products, and also in its competence to render specialised type of

service to the complete satisfaction of its customers
...
Though both extremes, and even
the hybrid of the two, have their own situational suitability, the
important point to note is that salesmanship, being a showmanship
function, must arouse active participation of the prospect in the
presentation process
...
One possible way would be a
joint review of the problem faced by the prospect
...


144

MKT201

PRINCIPLES OF MARKETING

Step 6
Handling Objections: It is in the last phase of the sales presentation
step that the prospects start expressing doubts, or raising objections
whether relating to price, need for more time to think, satisfied the

existing product/supplier or product quality claims
...
There is certainly no doubt that the prospect
has to be thoroughly convinced that the product would satisfy his need
...

The golden rules for handling objections are:
(1)

Welcome the objection and show respect to the prospect, and

(2)

Do not argue with the prospect
...
Only in extreme necessity, should a
salesperson ask the prospect to adequately explain the problem
faced
...
It should be
remembered that handling objections sharpens the selling skills

of the salespersons
...
There is a critical point
during each presentation when the salesperson should ask for the order
...

The salesperson should have the ability of catching the buying signals
given by the prospect and should act on them fast
...
These signals show that the time is
ripe to start taking the order
...
A few repetitions reassuring the benefits of the
product keep the customer sold
...
This builds favourable feelings and nurtures the strong buyerseller relationships
...
This also helps generate repeat business and
valuable word-of-mouth publicity
...

Let us conclude this section by stating that although the eight steps of

the selling process are essential in spirit, these may not always be
followed
...
g
...

Let us also look at the findings of a study by Robertson and Chase on

the subject
...


The more closely matched the physical, social and personal
characteristics of the customer and salesperson, the more likely is
the sale
...


The more believable and trustworthy the customer perceives a
salesperson to be, the more likely is the sale
...


The more persuadable a customer is, the more likely is a sale
...


The more a salesperson can make prospective buyers view
themselves favourably, the more likely a sale is
...


146

MKT201

PRINCIPLES OF MARKETING

SELF-ASSESSMENT EXERCISE 2
What general procedure should be followed when qualifying prospects?

3
...

There is no single universally accepted definition of sales promotion
...
Let

us look at some of the popular definitions of sales promotion:
According to the American Marketing Association, sales promotion

refers to:
‘those activities other than personal selling, advertising and publicity,
that stimulate consumer purchasing and dealer effectiveness, such as

display shows and exhibitions, demonstrations, and various other nonrecurrent selling efforts not in ordinary routine
...

Roger A
...
’
Yet another definition that seems fairly exhaustive, and hence, will be
used in this unit is the one given by Stanley M
...
Stanley defines sales promotion as:
‘all the marketing and promotion activities, other than advertising,
personal selling, and publicity, that motivate and encourage the
consumer to purchase by means of such inducements as premiums,
advertising specialties, samples, cents-off coupons, sweepstakes,
contests, games, trading stamps, refunds, rebates, exhibits, displays, and
demonstrations
...

It offers a direct inducement to act by providing extra worth over and

above what is built into the product as its normal price
...

Summing up, sales promotion deals with promotion of sales by the offer
of incentives which are essentially non-recurring in nature
...

Like in other market economies, the use of sales promotion is catching
on in Nigeria in terms of volume
...
The schemes offered at the dealer level also nearly doubled
during the period 1978-79 and 1982-83
...

In terms of product groups, the major users of sales promotion are: tea,
coffee, and beverages, soaps, detergents and washing soaps, toothpaste,
textiles, food products and baby foods, household remedies, and
consumer durables like fans, refrigerators, sound systems, television and

other household appliances
...

Why Rapid Growth?
A perusal of the list of the product groups which emerged as the major
users of sales promotion, and form the market feel, it seems clear that a
transformation from the seller’s to the buyer’s market is taking place and
marketing has become more competitive in these product markets
...


•

measurement of the effectiveness of sales promotion is easier as

•
•

against other promotional methods
...

products are becoming standardised and similar, and so need
increased support of non-price factors of which sales promotion

•

148

is an important one
...
With virtually no brand loyalty, offer of

MKT201

PRINCIPLES OF MARKETING

attractive schemes helps manufacturers to induce such customers
to choose their product
...
5

Sales Promotion Objectives

As a powerful method of sales promotion with a capability to
complement and supplement the advertising function of marketing, sales
promotion helps marketers realise a variety of objectives
...
e
...
Some of the commonly attempted objectives are to:
•

•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•

increase sales (in general, and focusing on new uses, increased
usage, upgrading unit of purchase, winning sales of fading
brands, etc
...


Companies may use any one or a combination of the above objectives in
varying forms to suit the product-market needs of their product
...


149

MKT201

MODULE 3

SELF-ASSESSMENT EXERCISE 3
Can you recall any 10 sales promotional objectives just read?
itemise them
...
6

Please

Sales Promotion Methods

Many methods of sales promotion are used by marketers
...

We refer here to some of the most commonly used methods of sales

promotion
...
Hence various sales promotion methods are built around these
three target groups
...
e
...
Immediate impact schemes are
those schemes where the consumer, dealer or salesperson gets the
incentive on first contact, purchase or on performing a one-time act
...
Price discounts, free
samples of large quantity packs are the popular examples of immediate
impact schemes, whereas coupons, trading stamps, and contests are
example of delayed impact category of sales promotion schemes
...
The meaning and

objectives of these schemes are given in Table 3
...
Cowell’s article on Sales Promotion and the
Marketing of Local Government Recreation and Leisure
Services, European Journal of Marketing, 18
...


151

MKT201

Table 3:

PRINCIPLES OF MARKETING

Sales Promotions: Meaning and Objectives

S/N Sales Promotion
Price-Off Offers
1
...


Objectives
To encourage immediate
sales, attract non-users,
induce new product trial,
counter
competition,
inventory clearance at the

retail level, inventory
build-up at the trade level
...


Quantity-Off Offers Offering more quantity of To encourage more/longer
duration consumption,
the same product at no
extra cost or with a very
nominal increase in the

3
...

quantity packs size
...
Its induce trial of new
forms are:
product, ensure reach of
premium to the consumer
...

Where the premium article Sampling new products,
is handed to the package adding speed to slow
of
moving products
...

To counter competition,
When the premium article

Counter (OTC)
Premium

(d) Container
Premium
(c) SelfLiquidating
Premiums

(c) Personality

Premium

is neither inserted inside improve
inventory
nor banded to the product clearance at the trade
package but is given
level
...

As a durable reminder at
When the product itself is home
...

To induce consumer to
Where the consumer
usually is asked to pay appropriate
premium
a
specified amount to article, reinforce brand
liquidate or offset a part or image, encourage more
enables
full cost of the premium consumption,
article or the scheme
sponsor to offer better
administration cost’s
quality premium
...


Proof-of-purchase

may be labels, pack tops,
bottle tops, corks, etc
...


MKT201

4
...


part payment
...


Coupons may

be distributed by mail, by

media

advertisements,
inside
product package or by
dealers on purchase
...


Refund Offers

Offer of a refund of money

to the consumer for
mailing in a proof-ofpurchase of a particular
product(s)
...


6
...
Trading
stores
...


Consumer Contests

and Lucky Draws

quantum of their purchase
...

Where individuals are and stimulate interest in
invited to compete on the

8
...
the
The latter is based on the consumers with brand
chance or luck factor
...

It is a type of point-of- To
provide
product
purchase
advertising exposure at the point o f
purchase, generate traffic
which uses the show
windows of the dealers for at the store, infuse
providing exposure to
enthusiasm
among
the
sponsor’s
products
...

Dealers
participating

153

MKT201

9
...

Where
participating To increase sales, buyer
dealers’ loyalty, motivate
dealers are invited to
compete in terms of the dealers’ staff to sell more
...


10
...

trade, early cash recovery
...


Trade Allowances

These are temporary price
reductions/reimbursements
of expenses incurred by
dealers, in full or in part,

its varied types are as

under:
(a) Trade or
Buying
Allowance

Offer of price reduction on

purchase

of

To load the trade
...


(b) Buy-Back
Allowance

A secondary incentive To encourage trade
which offers a certain sum cooperation and stimulate
of money to trade for each repurchase
...

(c) Count and Re- When a specific amount of To move stocks faster,
count Allowance money is offered after reward on sale only
...

An allowance to trade for To create enthusiasm in
providing desired sales trade, improve traffic and
promotion and product exposure at the point-of-

displays
...


To gain product and retail
Wherein a manufacture
Advertising and shares at an agreed rate the identity, motivate dealers
to promote manufacturer’s
advertising and
Promotion
product, obtain local
promotional
cost
incurred
Allowance
advertising and
by the dealer in the
promotion
...


12
...


Premium or Push

Money

improve
dealer
Offer of useful articles and To
attractive gifts to dealers relations, make impact on
for their personal, family consumer scheme/contest
or office use
...

When an
additional To push a specific product
compensation is offered to or product line
...


154

MKT201

MODULE 3

14
...


Point-of-Purchase

Those special displays, To attract traffic at retail
racks, banners, exhibits, store, remind customers,
impulse
that are placed in the retai l encourage
store to support the sale ofbuying, ensure additiona l
visibility
to
the
a brand
...


competing manufacturers
...


Donald W
...
2
...
The difference in the use lies in the types of
schemes offered, and in the frequency of their offer
...
The sales promotion schemes offered at the
level of industrial distributors are: provision of extended credit and
provision of specialised sales/technical staff at the manufacturer’s cost,
besides the usual cooperative advertising and sales promotion, gifts, and
organisation of distributors’ contests
...


3
...
You
would recall that promotion constitutes one of the important elements of the
marketing mix of a firm
...
Further,
each of the four promotion methods has its own unique place in the
marketing communications mix of a firm
...


PRINCIPLES OF MARKETING

Rather, the real question is which

promotion method should be emphasised, how intensively it should be

used, and how it can be integrated with the other promotional methods
...
A promotional strategy aims at accomplishing the promotion

objectives in the allocated funds and within a scheduled period of time
...
Expressed in specific measurable
terms, these can be put as: increasing sales, improving market share,
creating product awareness and comprehension, developing a positive
attitude of the public towards the product, building a favourable image

of the product, or gaining competitive advantage
...
Lodish suggests ‘vaguely right’ criteria, the

relevant part of which is as follows:
Promotion Decision Area
Advertising Budget

Vaguely Right Criteria for Evaluation
Changes in buyer behaviour – long-term or
short-term – and its resulting profitability
...

Trade
Promotion Changes in buyer behaviour of the ultimate
Management
Consumer consumer, sales and profit changes (both short
Coupons
and long-term) caused by the coupons
...
First, it is dependent on the
promotional objectives, and next, on the characteristics of the target
public, their psychology, and the allocated funds
...
It would also require publicity which could be through
press release on the contest technology backing his product
...
O
...
and offer of introductory price
to encourage intentions would also be used and, definitely, personal
selling to overcome objections, offer conviction and precipitate purchase

action would complete the promotion picture
...
Nardy, for achieving the objectives
of, for example, loading the consumer with larger supplies, it can see
that it is required that all the methods of promotion be approached

156

MKT201

MODULE 3

simultaneously in terms of objectives to be achieved
...


4
...


And rare

will be a firm which makes use of only one promotional method
...
Given the complexities in the management of
the promotion function and its vulnerability to failure, it is desired that
the function be managed professionally
...


5
...

Personal selling is a direct person-to-person selling and promotion
method
...
The changing
market environment calls upon the sales force to transform itself in order
to perform a more creative role
...


Stated simply,

sales promotion deals with offering something extra as an incentive to
motivate an early purchase
...
Sales promotions aid in
achieving both the push-pull elements of a promotion strategy
...
Schemes offered
for gaining the push cover promotional allowances, gifts, discounts,
cooperative promotions, contests and awards and rewards
...


157

MKT201

PRINCIPLES OF MARKETING

6
...

ii
...
List and explain 5 types of sales jobs
...
Briefly
explain the first five 5 processes
...
0

REFERENCES/FURTHER READING

Burnett, John J
...
Promotion Management: A Strategic Approach
...

Hardy, G
...
Key Success Factors for Manufacturers’
Sales Promotions in Package Goods, Journal of Marketing, Vol
...
3, July, pp
...

Lodish, M
...
The Advertising and Promotion Challenge
...

Luick, F
...
Sales Promotion and Modern

Merchandising
...


158

MKT201

MODULE 3

UNIT 6

MARKETING RESEARCH AND ITS
APPLICATIONS

CONTENTS
1
...
0
3
...
0
5
...
0
7
...
1
The Context of Marketing Decisions
3
...
3
Purpose of Marketing Research
3
...
5
Marketing Research Procedure
3
...
7
Problems of Conducting Marketing Research in Nigeria
Conclusion
Summary
Tutor-Marked Assignment
References/Further Reading

1
...


It is your

responsibility to reduce the risk associated with the decisions which you

make
...

Therefore, you are always seeking information to improve the quality of
your decision-making
...
Moreover, in these areas formalised procedures
have greatly improved decisions: statistical quality control in
manufacturing, PERT in project scheduling, queuing theory in managing
large machinery maintenance programmes, etc
...


2
...


3
...
1

The Context of Marketing Decisions

•

In the area of marketing, much of the information required for decisionmaking exists outside the firm e
...
information on why people buy only
certain products and not other products; information about the
competitor’s next move; information about new government rules and
regulations which can affect your working, etc
...

The variables involved in the marketing decisions being external to the
firm make collection of information cumbersome and expensive
...


Moreover, many of the variables interact with each other in a very
complex fashion, which makes it difficult to isolate and measure specific
variables
...
The wrong choice of (information) variables
will not only result in unnecessary expenditure but can also lead the
decision-making process astray
...


The manager also needs to monitor what is

happening in the marketplace and in the general environment of the
firm
...


3
...
Crisp has defined
marketing research as … the systematic, objective and exhaustive search
for and study of the facts relevant to any problem in the field of
marketing
...
A study conducted today may
lose much of its relevance by next year and may need updating,
modification or even an entirely new effort
...
If your firm is marketing bathroom fittings,
160

MKT201

MODULE 3

you are dealing with functional products
...
Therefore, you may not use extensive marketing research to
understand the changes in customer tastes, because the variations in the
designs (given the functional character of the product) which you can
introduce are very limited
...

If your firm is marketing ready-made clothes for teenagers, you are
dealing with a market where rapid change is its distinguishing
characteristic
...
You would also need to monitor the fashion
scene in Europe and America and see what new trends can be
successfully adapted for the Nigerian market
...

In the latter case (ready-made clothes), marketing research is a critical
input for the mere survival of the firm; in the former (bathroom fittings),
marketing research is necessary because it can yield valuable ideas to
make the firm a market innovator and leader
...


3
...
A manager has before him a number of alternative
solutions to choose from in response to every marketing problem and
situation
...
By doing so, the manager is taking a big risk
because he has no concrete evidence to evaluate these alternatives in
comparison with others or to assess its possible outcome
...

making process becomes a little easier
...

The risk arises
because of two types of uncertainties: uncertainty about the expected
outcome of the decision, and uncertainty about the future
...


Unforeseen factors have the uncanny ability of

upsetting even the most stable apple cart
...
The company wanted to
introduce a new car model which would appeal to young executives and
professionals
...
Ford spent colossal amounts

researching and designing the new model which was named Edsel
...
This happened
because of occurrence of three unforeseen events
...
Secondly, the recession also set in at about this time and
people began looking for more economical means of transportation
...


This example highlights the fact that despite best research efforts, the
outcome can still be unpredictable
...
…”
The risk also arises because of uncertainty of what will happen in the
future, the way the customers or distributors would behave, the manner
in which the competition will react, and so on
...
However,
it cannot provide perfectly exact or accurate information
...

The third purpose of marketing research is that it helps firms in
discovering opportunities which can be profitably exploited
...
Food Specialities Limited
(manufacturers of Nescafe Coffee, Lactogen Powdered Milk) have
recently introduced in the Indian market a dairy whitener (as a substitute
for milk) called ‘Every Day’ to be used for making tea and coffee
...
Every Day fulfils a slot in the market for
powdered milk which was not being catered to by the existing milk

powders brands
...
4

Scope of Marketing Research

Marketing research (MR) is concerned with all aspects of marketing,
relating to product design and development, product-mix, pricing,
packaging, branding, sales, distribution, competition, target customer

segments and their buying behaviour, advertising and its impact
...

1)

Marketing is concerned with identifying and fulfilling customer
needs and wants
...
The
unfulfilled wants should first be identified and translated into
technically and economically feasible product ideas, which then
should be marketed to the customers
...
Marketing requires continuous
effort to improve the existing product, increase sales and beat the
competition
...
Besides this
information, it is also important for you to know the process by

which a prospective customer arrives at a decision to buy your
product
...
The study of consumers and their purchase
behaviour is so important that there is a separate, special body of
knowledge known as Consumer Behaviour
...
MR is helpful in determining the final design of
the product and its physical attributes of colour, size, shape,
packaging, and brand name
...
It can also help decide the
quantities to be produced according to the projected demand
estimates
...

3)

Marketing research helps in discovering what types of
distribution channels and retail outlets are most profitable for

163

MKT201

PRINCIPLES OF MARKETING

your product
...
Distributor,
stockist, wholesaler or retailer may represent one kind of
distribution channel in contrast to another in which you may use

only the distributor and retailer
...
The understanding between the firm

and distributors is that the latter will provide the after-saleservice
...


Marketing research indent reveals that one of the reasons for this
low sales performance is the poor after-sale service provided by

the distributor
...
The firm decides to do away with the
distributor and instead opens its own branch office
...
The result is improved sales and the incremental cost
associated with the new distribution network is justified
...

In some cases, the amount spent on advertising may be small,
while in others, it may run into millions of naira
...
Marketing
research can help the firm to do this
...
Research also provides information on the size and type
of audiences for different advertising media channels
...
Advertising research is also
helpful in determining customer perceptions about the image of
specific branches and companies
...

Government of Nigeria spends colossal amounts on various
socio-economic development schemes and projects
...
Just as a business organisation needs
MR to monitor the efficacy of its strategy in achieving the

objectives, so does the government and its departments
...
5

Marketing Research Procedure

Marketing research is undertaken in order to improve the understanding
about a marketing situation or problem and consequently improve the
quality of decision-making related to it
...
There are five steps

in every marketing research process:

•
•
•
•

Problem definition
Research design
Field work
Data analysis
Report presentation and implementation
...

However, not all marketing problems need further investigation or
research
...
For
example, your distributor wants 90 days credit against the usual 60 days
because he is facing certain financial problems
...

Some problems faced by marketing managers are such that they can be
handled on the basis of past experience and intuition
...
Decisions made on judgment may not always turn out to be
correct, but the problem may not be important enough to justify
substantial time, money and effort to be spent on solving it
...
Also, when the problem is such that the manager
has no past experience to guide him (as in case of a new product launch)
or the decision will have a critical impact on the future of the company
(diversification in new markets, new products), it is worthwhile to
undertake research and make decisions on the basis of concrete results

rather than mere hunch or judgment
...
It is correctly said that ‘a problem well defined is half165

MKT201

PRINCIPLES OF MARKETING

solved’
...
On the other hand, a vague,
general, or inaccurate statement of the problem only confuses the
researcher and can lead to wrong problems being researched and

useless results generated
...
e
...

Current Market Share

3
...

Marketing Research
Problem

To find out the reasons for the shortfall
in the growth rate in the non- office
market segment and suggest a specific
strategy to achieve a 10 per cent
market share in this segment by
December, 2007
...
Depending on the results generated at this stage, you

166

MKT201

MODULE 3

would decide whether to extend the scope of research or stop it

here
...


Now you are in a

position to prepare your research design
...


The data

collection methods, the specific research instrument and the sampling
plan that you will use for collecting data and the corresponding cost are

the elements that constitute the research design
...


This kind of data which has already been collected

by another organisation and not by you is known as secondary data
...
You must first check whether any secondary data is
available on the subject matter into which you are researching and make
use of it, since it will save considerable time and money
...
The data must also be checked for reliability,
relevance and accuracy
...
Original data collected
specifically for a current research are known as primary data
...
Primary data may be
collected through any of the three methods: observation, survey and
experimentation
...
This method is generally used to observe buyer behaviour in
a shop or to assess the impact of shelf placement and point of purchase
promotional material
...

The obvious limitation of the observation method is that it follows
observation of only overt behaviour
...
Such data can be generated by using the survey method
...
The survey may either be conducted within a
small group of customers through the focus group interview or may
cover a large number of customers with the help of a questionnaire
...
The
customers’ comments provide valuable insight into their thinking which
can help the manager to fine-tune his marketing strategy to suit different
customer segments
...
The questionnaire based surveys
yield not only qualitative but also quantitative data which can have
statistical validity
...
This is
basically a simulation of the real-life situation, but in a controlled
environment in which you systematically introduce certain elements to
study their impact
...
However, its use requires an extremely skilled
researcher to ensure results
...

SELF-ASSESSMENT EXERCISE
List the various types of secondary data which are generated by an
industry level association or federation
...

Research Instrument
In the observation method, the researcher may use a camera, tape
recorder or daily sheet (a sheet in which the number of times an event

occurs is recorded)
...

In the survey method, the most commonly used instrument is the
questionnaire
...
The
construction of a questionnaire requires great skill
...
The
objective of a pilot survey is to weed out unnecessary questions,

168

MKT201

MODULE 3

questions which are difficult to answer, and improve the phrasing of
certain questions which are difficult to comprehend
...
Each question should be checked to evaluate its necessity in
terms of fulfilling the research objectives
...


Questions

which require the respondent to answer questions about events which
occurred a long time ago or about which they do not have direct
knowledge should be avoided since you are not likely to get very
accurate responses
...
Too many irrelevant questions will only
increase the length of the questionnaire (which would only put off the
respondent) and also add to the burden of analysis without yielding any

useful result
...
Clearly worded, precise questions are not only easy to
understand but they also facilitate the proper response
...
This is especially relevant when information is being sought
on non-physical issues such as motivation, attitudes and personal values

of the respondent
...
The larger the
sample, the more accurate are the results likely to be, but the cost would
also be correspondingly high
...
In exploratory
research even a small sample may be sufficient
...

The choice of sampling procedure is between two kinds: probability
sampling and non-probability sampling
...
In
non-probability sampling, the researcher selects the units to be included
in the sample
...

But where true representation is important, probability or random
sampling is used
...


The cost that you can beat and

169

MKT201

PRINCIPLES OF MARKETING

the degree of accuracy which you require have to be weighed to arrive at
a decision
...

How should you reach your sample units: personally, by mail or by
telephone
...
Thus, wherever the questions are a little complex,
personal interviewing should be used
...
But this technique requires a skilled
interviewer and a great deal of administration and supervision
...

The mail questionnaire is extremely appropriate when your sampling
units are distributed over a wide geographical area and the cost of
reaching them personally is very high
...
On an average, you would have to mail 1000 questionnaires to get
back thirty filled up questionnaires
...
The
respondent may fill totally wrong information and you may never be
able to detect it
...
It allows you to clarify questions which may not be
clearly understood by the respondent and to reach a widely scattered
sample at a relatively low cost
...
Also, you
cannot conduct very long interviews over the telephone
...
Before
undertaking a research project, its cost should be calculated and assessed
against the benefits it would yield in improving the quality of decisionmaking
...
There are four kinds of costs involved in
marketing research
...

2)

170

Cost of time delays: The more time it takes to provide the
research results, the longer the dependent decision(s) is delayed
...

3)

Risk of adverse environment change: While the decision is
pending, unfavourable conditions may set in (entry of
competition) and consequently, the returns may be lower
...


Field Work
This is the stage where the research design has to be converted from the
planning stage to that of implementation
...


This data collection is known as

field work
...

1)

Planning
It has to be planned how many people will be assigned to the
field, what will be their geographical areas of coverage, how
many days will be required for the entire operation and what is
the pattern to be used for choosing sample units (every fourth
household in a lane, all flats with an even number in an apartment
‘block’, etc
...


2)

Supervision
Supervision is an extremely important input to ensure that the
data collected is genuine and accurate
...
The team members would plan their daily area of
field work in consultation with the supervisor
...
In the
evening the team would meet the supervisor, hand over the data

which they have collected and sort out any problems they may
have faced
...


The check can be conducted either over

the telephone (wherever possible) or by again visiting the sampling unit
...


Random checking is carried out to ensure that the field workers do

171

MKT201

PRINCIPLES OF MARKETING

actually collect data from the genuine source of information and not just
fill in the data using their own imagination ingenuity
...
The data has to be carefully checked to ensure that there is no

distortion because of field workers’ bias or the respondent’s bias
...
This bias would operate more in questions relating to income,
possession of certain items (VCR, air conditioner), and habits relating to
lifestyle (travelling abroad frequently, visiting clubs, restaurants)
...
A female interviewer may prefer male respondents
because she may feel that it is easy for her to gather information from

men rather than women
...
The
supervisor must give guidelines for tackling such situations
...

Data Analysis
After you have collected the data, you need to process, organize and
arrange it in a format that makes it easy to understand and directly helps
the decision-making process
...
There are three phases for analysing the
data:
1)
2)
3)

1)

Classifying the raw data in a more orderly manner
...

Applying analytical methods to manipulate the data to highlight
their interrelationship and quantitative significance
...


Quantitative: In this classification, data is classified by a numerical
measure such as number of respondents in each market segment,
number of years employed, number of family members, number of units
consumed, number of brands stocked or some such numerical

characteristic
...

Chronological: Chronological classification is that in which data is

classified according to the time when the event occurred
...

2)

Summarising the Data
The first step in summarising the data is the tabulation
...
Thus, we
know the number of times or the frequency with which a
particular data occurs
...
of units sold in April 2006
Up to 100
101 – 120
121 – 140
141 – 160
161 – 180
181 – 200

Above 200

No
...

The frequency distribution presented per se may not yield any specific
result or inference
...
Measures
of average or central tendency provide one such yardstick
...

Mode
The mode is the central value or item that occurs most frequently
...


A shopkeeper ordering fresh stock of shoes

for the season would make use of the mode to determine the size which
is most frequently sold
...

Median
The median is that item which lies exactly half-way between the lowest
and highest values when the data is arranged in an ascending or
descending order
...
Suppose you have the data on monthly
income of households in a particular area
...
Fifty per cent of all households have a monthly income
above the median value and fifty per cent of households have a monthly

income below the median income
...
It is computed by dividing the
sum of the values of the observation by the number of items
observed
...
It wishes to introduce the concept of a ‘single-day pack’,
i
...
a pack which contains only that number of slices that are usually
eaten in a single day
...
The firm has many
opinions on the ideal number of slices that the pack should contain –
ranging from three to as high as twelve
...

The research agency goes about the task in two steps
...
These families are asked to maintain for
one week a record of the exact number of slices they consumed each

day
...
There would be twenty
such mean values (5 families in 4 colonies each, sample size 20)
...


174

MKT201

MODULE 3

Step 1
Family 1
Days
No
...
of days)

Thu Fri
5
6

=

Sat
5

Sun
3

29 = 4
...
of bread
slices eaten daily)
2
3
4
5
6
7
8
9
10

Frequency (No
...
Eight slices is the most
commonly

occurring

consumption

pattern
...

The mean, mode and median are measures of central tendency or
average
...
However, there are always
extreme values in each distribution
...
To make a valid marketing
decision, you need not only the measures of central tendency but also
relevant measures of dispersion
...
If the number of observations at the extreme values is
175

MKT201

PRINCIPLES OF MARKETING

large enough to form a substantial number, it indicates an opportunity
for market segmentation
...


Such variations

from the central tendency can be found by using measures of dispersion
...

Range
The range is the difference between the largest and smallest observed
value
...


The smaller the figure of the range, the more compact and

homogeneous is the distribution
...
The variance is the average of the squared deviations of the
observed values from the mean of the distribution
...
The standard deviation is used to
compare two samples which have the same mean
...

Selecting Analytical Methods
Besides having a summary of the data, the marketing manager also
would like information on interrelationships between variables and the
qualitative aspects of the variables
...


Report Presentation and Implementation
The final step is the preparation, presentation and implementation of a
report giving the major findings and recommendations
...


(b)

Summary of conclusions and recommendations in which the
main findings of the research are highlighted
...


176

MKT201

MODULE 3

(c)

Sample and its characteristics which contain descriptions of the
sampling units in terms of their geographical location, socioeconomic profile and other relevant details
...
The data may be presented in tabular
form or graphically in a bar chart, pictogram or pie diagram; or in
a combination of all these
...
7

Applications of Marketing Research

The broad areas of application of marketing research are sales and
market analysis, product research, advertising, business economics and

corporate research, and corporate responsibility
...


Determination of Market Potential: The market potential is the
total amount of a product or product group which could be sold to
a market in a specified time period and under given conditions
...


ii
...


iii
...
Sales forecasting is applicable to both
existing products as well as new products
...
Basically, there are two
types of forecasts – short-term and long-term
...


iv
...
The
common factor may be a geographical area, sex (after shave
lotion is used only by men), age (toys for children under 5,

177

MKT201

PRINCIPLES OF MARKETING

between 5 & 7, etc
...

Children comprise the market for toys
...
The choice before the marketing
manager is whether to cater for the broad market of toys or to
only one or two of the specific market segments
...


Test Market: This is a controlled experiment to predict sales or
profit consequence of the various marketing strategies
...
You may have noticed advertisements for
soaps, or snack foods which sometimes carry the message
‘available only in Lagos’ or ‘available only in Onitsha’
...


vi
...


vii
...
Information can be collected on the
number of brands competing in the market, state of technology
prevailing in the market, geographical concentration and dispersal
of customers, nature of outlets selling the products, number of

such retail outlets, etc
...


Determination of Competitive Information: Research can
provide information on the marketing strategies used by various

competing brands and the ‘unique selling proposition’ of each
...
For example, should a new
brand of tea be positioned on the basis of its fragrance and taste,
or colour and strength, or price?
Business Economics and Corporate Research

(a)

Studies of Business Trends: These are to determine industries
with growth potential and those facing a stagnant future
...
Such studies reveal the extent to which
customers are sensitive to price changes, and provide valuable
clues to the market or in assessing the impact of price increase or

decrease on sales
...
The diversification may be into
totally new and unknown areas or into allied areas
...
A company in the business of
cooking oil would like to do research into one or more of the
following products for arriving at a ‘synergistic’ product-mix:
butter, spices, dehydrated foods, frozen foods, instant food mixes,

custard powder, branded wheat flour and rice
...


Before arriving at a decision, a firm would need to

research into factors such as availability of raw material and
labour, proximity to market place, telecommunication and
transport infrastructure, financial, taxation and other incentives
applicable to each location
...

4)

Advertising Research

(a)

Audience Measurement
This is carried out on advertisements appearing in different media
such as newspapers, magazines, journals, radio, TV, outdoor
hoardings, kiosks, bus side panels, etc
...
g
...

(b)

Determining the Most Cost-Effective Media Plan
Each media channel has its unique advantages and disadvantages,
and each media vehicle has its own cost structure
...

(c)

Copy Testing
One approach for researching into the effectiveness of the copy
(the words or pictures of the advert) is to test the following

elements:
•
•
•
•
•
•

Basic themes, ideas, appeals
Headlines baseline, pictures, jingle, story sequence
Pre-testing whole advertisements in rough or finished form
Pre-testing the effect of repetition to simulate a campaign (all the
above can be tested under simulated conditions)
After the advertisements have been released, post-testing them
individually in their normal media
The other approach for conducting research is to assess the copy
or the entire advertisement/campaign for the following:

-

assessing for its attention value, interest value and arousal,
testing for communication clarity,
testing for their effect on consumer attitudes,
testing for their effect on purchase behaviour
...
To what extent has the advertising achieved its

180

MKT201

MODULE 3

objective of creating brand awareness, creating corporate image,
educating the customers about the product usage, and so on
...

5)

Consumer Behaviour Research

(a)

To determine who the customers of the product (men, women,
children, working women, housewives, retired people) are and
profile them in terms of their socio-economic background, age,
religion and occupation
...

To determine their motivations to purchase your brand of
product
...

To find out the post-purchase satisfaction level of customers
...
7

Problems of Conducting Marketing Research in Nigeria

The biggest problem confronting anyone who sets out to conduct
research in Nigeria is the meager secondary data
...
Data

contained in journals and handbooks are usually two to three years old
...

In collecting primary data, the problems are those of widely scattered
sampling units, location or scope of sampling units in remote and
inaccessible areas, and poor communication facilities which compound
the problem of inaccessibility
...


The other kind of problem encountered in collecting primary data is the
uncooperative attitude of respondents arising out of sheer lack of
knowledge about the nature of MR and its utility
...

Most of the market research organisations are located in the cities and
have an urban-bias to the extent that they have neither a penetration/base
in the rural areas and cannot easily communicate properly with the rural
people
...


181

MKT201

PRINCIPLES OF MARKETING

State-of the art marketing research in Nigeria has not reached
sophisticated levels as in America or Europe
...


4
...
Marketing decisions involve variables which are often
external to the firm, dynamic in nature, uncontrollable by the firm and
interact with each other in a complex manner
...
The marketing
manager is always on the lookout for ways and means to reduce this
risk
...


5
...
MR can be used for pre-testing a strategy
before actually implementing it, monitor it during implementation, and
after implementation, monitor the results to assess its impact
...
The manager must take the
decision regarding the utility of MR on the basis of the cost involved in

conducting the research and the benefits expected to accrue from it
...
0

TUTOR-MARKED ASSIGNMENT

i
...
What
are these costs?
What are the areas in which marketing research is applied to?
Despite best research effort, the outcome of a research can still be
unpredictable
...


ii
...


182

MKT201

7
...
(1980)
...
California: Goodyear
Publishing Company
...
) (1974)
...
New

York: McGraw-Hill Book Company
...
Marketing Management: Analysis, Planning and

Control
...

Luck, D
...
; Wales, H
...
; Taylor, D
...
and Rubbin, R
...
(1978)
...
New Delhi: Prentice-Hall of India Private

Limited

---