SECTION 6: MARKETING

Difference between Market and Marketing

A market is any space where buyers and sellers of a product or service meet. This space can be a
produce market, a shop, internationally between countries or over the internet.
Marketing refers to all those activities that facilitate trade. These include activities that identify
consumers’ needs such as market research and those activities that satisfy consumers needs e.g.,
packaging and distribution. Marketing activities therefore support the marketing of goods and
services.
Social media marketing is a form of internet marketing that uses social networking sites. For eg,
Facebook and Instagram Ads.
Marketing Activities
Market research – the process of gathering information about potential customers.
Packaging – creating a suitable package for product usage and for advertising
Branding - differentiating the product of a company from other brands and establishing loyal
customers.
Pricing - identifying the right price that will encourage sales
Advertising – methods used such as the media to inform and encourage the purchase of goods
and services
Sales promotion – short-term methods used to encourage consumers to buy during a specified
period. Eg. Discounts – Payless BOGO Sale (Buy One Get One ½ Off), Sampling of Products in
Price Smart.
Distribution - methods used to make the product available to consumers. For example wholesale,
retail or internet.

Types of Markets
1. Commodity Market – these markets deal with extremely large quantities of agricultural
produce and raw material. Large buyers or sellers meet to set prices. Example,
agricultural products, oil, bauxite.

1
 2. Money Market – this include numerous financial institutions engaged in short term
lending. The duration of the loan should be less than three years. Example, loans from
commercial banks, credit unions.
3. Capital Market – this include those financial institutions involved in long term lending
to acquire capital goods. Example, stock exchange, insurance companies
4. Foreign Exchange Market – this market engages in the sale and purchase of
international currencies.
5. Labour Market – this market describes those willing and available to work. It is the
market for skills and expertise.

Types of Market Structures

The term market structure refers to the level of competition experienced by businesses in an
industry. This factor determines the nature of the product sold, how easy it for new businesses to
enter that industry and the amount of information available concerning that industry.

Perfect Competition

This is a theoretical market structure that does not exist in the real world. This market has:

2
 - A large number of buys and sellers
- A homogeneous or undifferentiated product
- Buyers and sellers who have perfect or complete knowledge about prices and locations of
all resources as well as other buyers and sellers
- Perfect freedom of entry into and exit from the market without any restrictions or barriers
- Businesses that are identical in every respect

Monopoly
A monopoly exists when only one supplier has control over an entire market for a particular
good or service. Examples of monopoly in Caribbean countries are a single electricity and water
supplier which may be owned by the government or a private company. There are three features
that characterise a monopoly market:
- The firm is motivated by profits
- The firm stands alone with barriers to prevent new firms from entering the industry
(barriers to entry).
- It is not a price taker

Oligopoly

Oligopoly describes a market structure in which there are few large firms. They offer the same
product for sale and compete aggressively for market dominance. Examples of firms in this
market structure are telecommunications and petroleum companies. Entry into this industry is
also difficult as start-up costs are very high, there is control of strategic raw material and
information is not easily available.

Monopolistic Competition

In this market structure, there are many firms producing goods or services that are similar but
have a few features that are different. This difference might simply be a brand name or a
difference in design or packaging.

The Marketing Mix

The marketing mix also referred to as the 4 Ps of marketing, categorizes all the various strategies
used in the marketing of goods and services. These categories are product, promotion, pricing
and place. The purpose of the marketing mix is to create perceived value for the customer or
target market.
(1) Product this includes product designing, packaging, labelling and branding.
(2) Promotion advertising, public relations and sales promotions.
3
 (3) Pricing includes various pricing strategies and methods.
(4) Place distribution of products.

1. Product

Product Life Cycle - A new product progresses through a sequence of stages from introduction to
growth, maturity, and decline. This sequence is known as the product life cycle.

Product Life Cycle Diagram

Introduction Stage

In the introduction stage, the firm seeks to build product awareness and develop a market for the
product

Growth Stage

In the growth stage, the firm seeks to build brand preference and increase market share.

● Product quality is maintained and additional features and support services may be added.
● Pricing is maintained as the firm enjoys increasing demand with little competition.
● Distribution channels are added as demand increases and customers accept the product.
● Promotion is aimed at a broader audience.

Maturity Stage

At maturity, the strong growth in sales diminishes. Competition may appear with similar
products. The primary objective at this point is to defend market share while maximizing profit.

4
Decline Stage

As sales decline, the firm has several options:

● Maintain the product, possibly rejuvenating it by adding new features and finding new
uses.
● Harvest the product - reduce costs and continue to offer it, possibly to a loyal niche
segment.
● Discontinue the product, liquidating remaining inventory or selling it to another firm that
is willing to continue the product.

2) Promotion
Promotion refers to the ways of spreading information about a product, brand or company. A
distinction must be made between promotions ‘into the pipeline’ and ‘out of the pipeline’.
Into the pipeline promotions are aimed at retailers and wholesalers (eg. Extend credit to dealers)
while out of the pipeline promotions are aimed at final customers (eg. Free samples, coupons,
discounts).
There are four types of promotion:
● Advertising

● Sales Promotions

● Personal Selling

● Public Relations
(Discussed further below)
3) Price
Price – the price a business charges will depend on the market it is trying to attract. The price of
the product is basically the amount that a customer pays to enjoy it. Price is the most critical
element of a marketing plan because it dictates a company’s survival and profit.
Price is elastic if an increase in price causes a great fall in sales. For eg. If a 5% increase in the
price of a product results in a 10% fall in sales.
Price is inelastic if an increase in price causes a very small fall in sales. For eg. If a 5% increase
in the price of a product results in only a 1% fall in sales or even no decrease in sales at all.
Methods of Pricing
1. Cost – Plus Pricing – a calculation is made on how much it costs to provide a good /
service then a ‘mark-up’ is added as profit. For eg. It costs a shop owner $20.00 to make
fried chicken and fries but he adds $10 as profit, bringing the total cost of the fried
chicken and fries to $30.00.

5
 2. Competitive Pricing – this is where prices are set according to competitors’ prices.
Businesses have three options when setting the price for a good or service: set it below
the competition, at the competition, or above the competition.
3. Penetration Pricing – a new product is offered at a low price when it enters the
market. It best works in very crowded markets where it is hard to attract customers away
from more established brands. A loss will be made until the new product has penetrated
the market. Once market penetration has been achieved, prices can be increased.
4. Price Skimming – a new product is offered at a very high price at the beginning.
Some customers may want to be the first to purchase this product because of the prestige
that is attached. After a while, the price will be reduced to capture other customers. Eg.
Iphones
5. Promotional Pricing – a new product could initially be sold at a lower price as a
promotion to attract new customers.

4) Place

6
Place decisions are concerned with deciding how products should move from manufacturer to
the final customer. Distribution channels makes products available to customers where and when
they want them.
A distribution channel is the means by which an organisation and its customers are brought
together at a particular place and time to buy and sell goods. This may be in a store, via the
internet or even over the phone. The organisations that are involved in the distribution chain
include:
● Manufacturers – firms that make the products

● Wholesalers – firms that store goods in bulk which are purchased from manufacturers
and then sold to retailers or the final customer. Eg. Price Smart
● Retailers – firms that sell goods to final customers

● Consumers – end users of goods / services

A B C D E
Manufacturer Manufacturer Manufacturer Manufacturer Manufacturer

Wholesaler Wholesaler

Retailer Retailer E- Tailer

Customer Customer Customer Customer Customer

The above diagrams show the channel of distribution.

● Channel A – the manufacturer sells directly to the customer eg. Ordering directly from a
catalogue or going directly to a factory.
● Channel B – the manufacturer sells to the wholesalers first then the wholesaler sell to the
customers. Eg. Kiss Baking Company Price Smart Customer.
● Channel C – the manufacturer sells to the wholesalers, the wholesaler resells to the
retailers and the customer buys from the retailer.
● Channel D – retailers buy directly from manufacturers and then reselling to customers.
Eg. Mini Mart in your community buying from Kiss Baking Company and the selling to
the customer
● Channel E – delivery of online purchases directly to the customer.

Forms of Transportation

7
Transportation is an integral part of the daily commercial and industrial activities of a country.
Transportation moves raw materials from source to manufacturers and finished goods to
consumers. It also makes possible overseas trade and thus foreign exchange earnings for an
economy.
There are various modes/forms of transportation that can be used to transport goods.
Commodities may be transported by land, air, sea and pipeline. The mode of transportation will
depend on weight and size of the commodities being transported, as well as the urgency for
delivery and the transportation costs.
Modes/Forms of Transportation
● Land
● Road
● Rail
● Air
● Sea
● Pipeline
Land-Road
Types of transportation include trucks, vans, cars etc. It is the most popular mode of transport as
all types of goods can be transported by road. Road transport is affected by bad roads, traffic
congestion and challenging terrain. Lengthy delays can affect perishable goods such as farm
produce being transported from rural areas to cities.
Land-Rail
This is a cheap form of transportation over long distances. Trains are suitable for heavy and
bulky things such as bauxite. Trains are a very slow mode of transportation.
Air
Types of transportation include cargo planes and helicopters. Because of the high cost involved
with air transportation it is suitable for important documents and expensive items e.g. jewellery.
Sea
Cargo ships and barges are some of the types of transportation used for transporting goods by
sea. Goods such as oil, bauxite and cars are transported by sea.
Pipeline
Pipelines are used to transport commodities such as water and gas. High costs are involved in
laying pipes initially. However overtime it becomes very economical.
Factors that influence Choice of Channel of Distribution
1. Type of product – size, shape, weight, fragility, how expensive
2. Consumers – target market influences the channel

8
 3. Quantity to be delivered – fewer goods would require a wholesaler or retailer.
4. Frequency of delivery- more frequent deliveries would mean longer channel.
5. Location – Remote areas require an agent.
6. Budget- Middleman can absorb cost of transportation
7. Speed – eg perishable items may require quick transport by air.
Importance of Transport:
● It brings goods form producers to final consumers

● Carries raw materials and crops to factories

● Helps to minimise inventory holdings and keeps costs down

● It minimises risk of shutdown of factory if raw materials are not available

● Reduces expenses and makes goods more competitive internationally

● It widens the market and demand for the product hence promoting economies of scale
and specialisation.
● It increases employment

● It brings a variety of products to the consumer

Transportation Network Facilities:

● Refrigeration facilities

● Adequate dock spaces

● Adequate parking spaces for aircrafts, lorries and containers

● Handling and moving facilities eg. forklift

● Warehousing space
The unavailability of the above facilities can seriously hamper transportation and distribution
channels.
Problems of Distribution
Distribution locally is challenged by poor road conditions and difficult terrain especially in the
rural areas. Spoilage of perishable goods is very costly and therefore types of transportation used
must be equipped to carry perishable goods.
Problems encountered in Overseas Transportation
The challenges faced in transporting goods internationally will impact foreign exchange
earnings. These challenges include:
● Inadequate facilities for temporary storage eg. warehousing space
9
 ● Transport system and networks that do not connect to ports or receiving points and
distribution road routes.
● Misdirection of goods – goods mistakenly sent to the wrong destination
● Lack of understanding of customs regulations.
● Flight delays
● Strikes by airport and ship port workers.
● Pilferage- goods stolen in transit.
Measures to mitigate problems of distribution
● Contingency plan when strikes occur
● Properly labelled goods
● Proper planning and implementation
● Government intervention to improve connectivity of distribution networks.

10
Market Research
Market research is the gathering, recording and analysing of data to address the marketing
problems of a business. Market research must be specific to the problem of a business. The
marketing problem must therefore be clearly identified so that the appropriate market research
may be conducted.
Market research helps answer these questions:
● How big is the market?
● What are your main competitors?
● Do the consumers like your product?
● What are its strong and weak points?
● What price should you charge?
● How should you advertise your product?
Types of Market Research
Consumer Research – garners information on consumers’ feelings, thoughts and reactions
towards a company’s good or service.
Product Research – determines customer acceptance of the product whether it may be changes
in an existing product or a new product.
Distribution Research – used to identify the most suitable channel of distribution for particular
products based on effectiveness of those channels.
Advertising Research- Identifies the most suitable media to present the advertising message.
Sales Research- Research on the target market eg size of market, potential, age, sex, income and
geographic variables.

The Marketing Research Process

This consists of five steps:
1. Identifying or defining the problem.
2. Developing information sources.
3. Collecting the information.
4. Analysing the data by using charts and graphs
5. Presenting the findings.

11
Reasons for Conducting a Market Research
Market research provides managers with current, relevant, accurate and reliable information
concerning competitors, advertising, distribution and potential and loyal customers. This
information assists managers in making decisions about packaging, product design, pricing,
distribution and advertising.
Consumer taste – Identification of consumer taste will enable the firm to produce goods and
services that will cater to the preferences of the consumer. Eg. Cadbury assortment of chocolates
Competition – Identification of the competing firms will allow the firm to adjust its marketing
strategy to gain a market advantage. Eg. Sell at lower prices than competitors.
Consumer Behaviour – Research on consumer behaviour will allow the firm to adjust their
products and services to changes in the factors that influence behaviour. Eg. Increased
consumption of fish during Lent.

Factors that Influence Consumer Behaviour

The following factors will cause consumers to either increase or decrease their demand for a
product.
-The price of a commodity
Consumers can afford to buy more of a good when its price falls and less when its price rises.
-The prices of other goods and services (substitutes and complements)

12
Substitute products are those that can be used alternatively as they satisfy the same need for a
consumer. For example, a weekly shopper may decide to purchase fish instead of chicken
because the price of fish has fallen significantly less than the price of chicken. Therefore either
fish or chicken will be adequate for dinner. If by the next week the price of fish rises and
becomes more expensive than chicken then the consumer will opt for chicken.
Complements are goods that are used together e.g. bread and butter. If the price of butter rises
then its demand will fall and so will the demand for bread. Conversely if the price of butter falls,
its demand will rise and so too will the demand for bread.
Income of consumers
As income level rises consumers will demand more goods and services
Taste and Preferences
A change in consumers taste for goods and services will impact their demand. For example,
changes in fashion will result in a drastic decline in demand for an outgoing fashion and a rise in
demand for what is trendy.
Quality
A Consumer’s main motivation for the purchase of product may be the quality of the product
rather than the price. Eg perceived higher quality of Apple products
Expectations of a future Rise in Price
If consumers expect the price of a commodity to rise in the near future, they will try to purchase
more now, before the price increases.
Brand Loyalty
Brand loyalty will ensure a continuous demand for a product regardless of changes in its price or
the prices of other goods and services.

Spending Patterns
Consumer spending surveys compile information on consumer spending patterns based on
income levels. This informs businesses of what goods and services are in demand.
Changes in the size of the population
A population decline will cause demand to fall in a particular region. One reason for a population
decline in a region is migration.

13
Packaging and Presentation of Goods
Packaging refers to designing and producing the container that holds the product. A good
package must identify, protect and advertise the product. It must also make the product
convenient to use. Therefore products such as toothpaste are best packaged in a tube as it has to
be squeezed out. Milk must be poured from its container. Egg containers are so shaped to hold
them securely.
A package must also sell the product. It must first attract customer to buy. It must provide
information about the product i.e. ingredients, amount of contents, price, the name and address of
the manufacturer and instructions for usage. The brand name is also displayed on the package.
Functions of Packaging
- The Distribution Function: packaging in quantities that serve the needs of the individual,
small, medium or large families and even in the needs of institutions.
- The Transportation Function: durable to withstand the storage and transportation of a
product. Example, pasteurised milk packaged in Tetra Paks no longer have to be
refrigerated during delivery.
- The Identification Function: this serves to identify the product. It gives a description of
content, weight and instructions for use.
- The Protection Function: packaging is created in such a way to provide a measure of
safety for the user. Example, blades or razors are wrapped to protect customer,
medication has safety seals to prevent access to kids.

14
 - The Attraction Function: this serves to attract customers. Example, snacks for children
are usually bright coloured or contain cartoon drawings.
- The Environment – Friendly Function: packaging is designed to be ecologically
friendly through the use of biodegradable or recyclable materials.
- The Promotional Role: serves to promote the company’s image.
- The Convenience Role: ensuring the products are easy to use. Example, the attachment
of straws to packaged drinks.
Branding
A brand is any identifiable feature of a product which makes it different from its competitor. A
brand may be a name, term, symbol, design or combination of these. Examples of brand names
include: Avon and Colgate. A brand symbol e.g.

represents the Nike brand. A branded product will increase the value of the product in the eye of
the consumer and enable consumers to recognise a product instantly.
Labelling – Labels are important features of a product that provides customers with vital
information on grade, product description, ingredients, uses, caution, expiry date, date of
manufacture and storage.

Copyright, Patent & Trademark

Intellectual Property- is any creation of the mind. Songs, books, ideas, machine designs and
other inventions are the intellectual property of the person who has designed or created it.
Copyrights, patents and trademarks are used to protect the intellectual property of owners.
Copyright is a form of intellectual property right that legally protects the creators and innovators
of original works. Copyright protects creators’ expressions such as music, painting, movie,
photograph, writings etc. Individuals who wish to use works that are copyrighted must request
permission from its creator. Copyright law allows creators of original work to be paid for them.
Other forms of intellectual property rights are patents and trademark.
A Patent is the right granted to the inventor of a process, machine, technique, formula or other
composition of matter. It protects innovation. It also excludes others from making and selling
that invention for a number of years. For eg. a franchisee receives a special licence to reproduce
the product and must pay the fee to the franchisor
Trademark legally protects brand names. It gives the seller exclusive rights to use a particular
brand name.

15
 Methods of Promoting Sales
Promotion includes all forms of advertising, public relations and sales promotion.
1. Advertising is the paid presentation of goods or services through the media for the purpose of
encouraging consumer patronage. The media refers to television, radio, magazines, newspapers,
billboards, websites etc.
The Purpose of Advertising
-to attract attention and create awareness
-to inform and educate customers
-to increase sales
-to introduce new products onto the market
-build loyalty with customers
-to differentiate from competitors

Types of Advertising

Informative Advertising

Informative advertising is often used when launching a new product or for an updated or
relaunched product. The objective is to develop initial demand for a good, service, organization,
or cause. It is used when a new product is put on the market on when an old product has been re-
launched or updated.

Informative advertising will tell the consumer and marketplace about the product, explain how it
works, provide pricing and product information, and should build awareness for the product as
well as the company. The image of the product and the company should be compatible and

16
complementary. There should be enough information to motivate the consumer to take some sort
of action.

Persuasive Advertising

Marketers use persuasive advertising to increase the demand for an existing good, service, or
organization. The idea is persuade a target audience to change brands, buy their product, and
develop customer loyalty. After the purchase, the quality of the product will dictate whether or
not the customer will remain loyal or return to the previous brand.

Persuasive advertising is highly competitive when there are similar products in the marketplace,
and products are competing for their share of the market. In this situation, the winning product
will differentiate itself form the competition and possess benefits that are superior to, or compete
strongly with, the competition.

Reminder Advertising

Reminder advertising reinforces previous promotional information. The name of the product,
testimonials of past customers, public response, and sales techniques are repeated in the hopes of
reminding past customers and garnering new ones. It is used to keep the public interested in, and
aware of, a well-established product that is most likely at the end of the product life cycle.

Competitive Advertising

Promotes one product over a competitor.

Defensive Advertising

Reacts to competitive advertising to maintain market share.

Forms of Advertising
Direct Forms Indirect Forms
Circulars Press: Newspapers, Magazines, Journals
Catalogues Television, Radio, Website, Social Media
Free Samples Cinema Screens
Souvenirs Posters, signs and wallscapes
Word of Mouth Point of Sale: Speciality shop display
Cell Phones Exhibitions, fairs, carnivals
Chat room Mobile Caravans

17
2. Sales Promotion
Sales promotion is a marketing strategy that is used to induce customers to buy immediately.
Examples of sales promotion methods are:
- A sale on items.
- Bargain packs, e.g. ‘two for price of one’.
- Coupons. These are printed in the daily newspaper or magazines. The holders of coupons are
allowed a discount on the items bought.
- Loyalty Cards – These cards can be bought by the customer. After every sale, they accumulate
points on their card and can eventually receive discounts on items. Example, Rituals Coffee
House Loyalty Card.
3. Public Relations
Public relations activities are aimed at creating a favourable impression of a business in the eyes
of the public. Public includes its customers, its suppliers, the government and the surrounding
community. Public Relations activities include sponsorship of local sporting events, press
conferences, and donations to charity.
4. Personal Selling
This is the use of sales persons to present and sell goods and services of a firm. Sales persons
promote a firm’s goods directly to a specific consumer. They locate new customers, provide
display services, demonstrate the use of products, deliver goods, collect payments and provide
the firm with feedback

18
Terms of Sale
A business establishment may offer its customers various terms to settle accounts i.e the way that
payment are made for purchases.
Cash
This is preferable by most businesses and therefore customers are encouraged to make cash
payments. They are usually offered a lower payment amount for goods bought for cash.
Credit
Customers are allowed to pay at intervals over a short- term, usually one to three months to settle
outstanding balances.
Hire Purchase
Hire-purchase is a long term payment plan e.g. 24 – 36 months. Interest is charged to the
customer increasing the amount owed.
Cash Discount
A cash discount is a reduction in the price of a good that is paid for immediately or over a short
period of time by a customer. For example, if a an appliance store offers 5% discount on items
bought for cash then 5% of the sale price would be deducted from the actual bill
Trade Discount
A trade discount is the reduction in the price of a good given by a manufacturer or a wholesaler
to a retailer to allow the retailer to make a profit or to encourage bulk buying. Thus if an
appliance manufacturer offers 10% trade discount to retailers then 10% of the catalogue price or
the quoted price would be deducted from the retailers’ actual bill.

Consumer Organizations
Consumerism is defined as the education and the protection of consumers to prevent their
exploitation.
Consumer exploitation includes:
● overcharging
19
 ● offering poor quality goods and services
● short measurements and weights
Consumerism is practised by various groups in the economy: the government, private
institutions, and private firms.
Consumerism practiced by the government
This is done through various government agencies. These include:
1. The Consumer Affairs Commission – This institution was set up to disseminate information
about consumer rights and responsibilities as well as provide consumers with an avenue for
redress if they are exploited.
Consumer Rights
-The right to safety
-The right to be informed
-The right to choose
-The right to be heard
-The right to redress
-The right to consumer education
-The right to a healthy environment
Consumer Responsibility
-The responsibility to beware
-The responsibility to be aware
-The responsibility to think independently
-The responsibility to speak out
-The responsibility to complain
-The responsibility to be an ethical consumer
-The responsibility to respect the environment and avoid waste, littering and contributing to
pollution.
2. The Fair Trading Commission – This agency was set up to administer the fair trading act. It
is concerned with matters such as; Tied selling (marrying of goods), misleading advertising
(untruths about goods and services presented for sale), untrue sale (an announced sale for which
the price of items remain the same).and the use of market dominance to squeeze firms out of the
industry (For example, large firms may drop the price of their goods so low that small firms are
unable to compete with them.)
3. The Bureau of standards -The bureau carries out regular checks on business enterprises to
ensure that goods and services offered for sale meet the standards stipulated by this institution.

20
4. The Ombudsman
The Ombudsman is a government official who protects the rights of citizens who may suffer any
kind of injustice from dealing with a government agency or a government official. For example,
the Ombudsman will investigate the death of a loved one due to the negligence of a public
hospital. He/she has the power to:
● to summon witnesses to appear and give evidence under oath
● to enter and inspect any government department or authority
● to examine any necessary documents

The Role of Customer Service

The primary role of customer service is to address customer issues and resolve them in a timely
and efficient manner.
Forms of Customer Service
1. Warranty
2. After Sales Service
3. Feedback
4. Online Chat
5. Toll Free Numbers / Call Centres
6. Suggestion Box
7. Surveys

21