EAST AFRICA UNIVERSITY

FACULTY OF BUSINESS
ADMINSTRATION
UNIT: PRINCIPLES OF MARKETING

AUTHOR: MR AHMED ADAN DAHIR

9/1/2022
TOPIC ONE: INTRODUCTION OF MARKETING MANAGEMENT

THE CORE CONCEPTS

1.1 INTRODUCTION

This lecture introduces the learner to the basic concepts of marketing management as well as
their environment of application. It focuses on marketing management concepts, marketing
philosophies/orientation and marketing and change inter-linkage also referred to as strategic
marketing triangle.

1.2 LECTURE OBJECTIVES

By the end of this lecture, the learner should be able to:

 Describe the concept of marketing management

 Discuss relevance of marketing in management practice
 Identify and explain various marketing orientations
 Illustrate how marketing orientation influence marketing and other decisions within the
organization

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1.3 SUBTOPIC 1 CORE MARKETING CONCEPTS

 Market: People or institutions with sufficient purchasing power, authority,

and willingness to buy. A market consists of all the potential customers
sharing a particular need or want who might be willing and able to engage
in exchange to satisfy that need or want.
 Marketing: According marketing staff of the Ohio state university:
marketing has been described … as a business activity; as a group
of related business activities; as a trade phenomenon; as a frame
of mind; as a sense of business purpose; as an economic process;
as a structure of institutions; as the process of exchanging or
transferring ownership of products; as a concentration,
equalization and dispersion; as the creation of time, place and
possession utilities; as a process of demand and supply
adjustment; and as many other things.
 The American Marketing Association has recently defined the term
marketing as an organizational function and a set of processes
for creating, communicating and delivering value to customers and
for managing customer relationships in ways that benefit the
organization and its stakeholders (Wilkie, 2005).
 Marketing therefore is the process of anticipating and
understanding customer needs, developing and delivering value to
customers to satisfy their needs and wants, doing so effectively
and efficiently, better than the competitors and at a profit.
 Marketing management is the process of planning and executing
the conception, pricing, promotion and distribution of ideas, goods
and services to create exchanges that satisfy individuals and
organizational goals.
 Marketing philosophy is usually presented as one of a number of
managerial philosophies which constantly compete for visibility
within the organization (Morgan, 1996).
 Target Market – the market segment selected by an organization
upon which it concentrates its marketing efforts.

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  Utility is the consumer’s estimate of the product’s overall
capacity to satisfy his or her needs.
 Value is a ratio between what the customer gets and what he
gives. The customer gets benefits and assumes costs. The
benefits include functional benefits and emotional benefits.
The costs include Monetary Costs, time costs, energy cost and
psychic costs.
 A transaction consists of a trade of values between two
parties e.g. money transaction or barter transaction. A
transaction involved several dimensions i.e. at least two
things of value, agreed upon conditions, a time of agreement
and a place of agreement.
 Relationship Marketing: Development and maintenance of
long-term, cost-effective exchange relationships with individual
customers, suppliers, employees, and other partners for mutual
benefit.

1.4 DIFFERENT MARKETING ORIENTATIONS

 Marketing philosophies or orientations defines the way of thinking adopted by the

management of an organization in making marketing decisions. It forms the foundation upon
which decisions are made within that organization. Marketing orientations include:

1. The production concept

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This holds that consumers will favour those products that are widely available and low in cost. Managers
of production oriented organization concentrate on achieving high production efficiency and wide
distribution coverage.

A production orientation’s major shortfall lies in the fact that it does not consider whether the goods and
services that the business produces most efficiently also meet the needs of the market place. On the other
hand when the competition is weak or demand exceeds supply a production orientation company can
survive and even prosper.

2. Product concept

The product concept holds that consumers will favour those products that offer the most quality,
performance and features. Managers in these products oriented organization focus their energy on
making good products and improving them overtime.

3. Selling concept

It holds that consumers and business if left alone will ordinarily not buy enough of the organization
product. The organization must therefore undertake an aggressive selling and promotion effort. This
concept assumes that consumers typically show a buying inertia or resistance and must be coaxed into
buying.

It also assumes that the company has a whole battery of effective selling and promotion tools to stimulate
more buying. Selling focuses on the needs of the seller i.e. it is pre-occupied with the seller’s needs to
convert his product into cash.

Selling takes an inside-out perspective i.e. it starts with the factory, focuses on the existing products and
calls for heavy selling and promoting to produce profitable sales.

4. Marketing concept

This holds that the key to achieving its organizational goals consist of the company being more effective
than competitors in creating, delivering and communicating customer values to its chosen target market.

Marketing focuses on the needs of the buyer i.e. it is pre-occupied with the idea of satisfying the needs of
the customers by means of product and the whole cluster of things associated with creating, delivering
and finally consuming it.

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The marketing concept takes an outside in perspective i.e. it starts with a well defined market, focuses on
customer needs and coordinates all the activities that will affect the customers and produces profits by
satisfying customers.

The marketing concept rests on four pillars

1) Target market
Companies do best when they choose their target markets carefully and prepare tailored marketing
programs or strategies.

2) Customer needs
Customer retention is more critical than customer attraction. The key to customer retention is customer
satisfaction. A satisfied customer:

• Talks favourably to other about the company and its products

• Buys again
• Pay less attention to competing brands/products and advertising
• Buys other products that the company adds to its line

Today marketing aims to delight the customer i.e. going beyond meeting the mere expectations of the
customer.

3) Integrated marketing
When all the company departments work together to serve the customers interests the result is
integrated marketing.

Integrated marketing takes place on two levels.

• The various marketing functions e.g. advertising, personal selling, customer service, product
management, marketing research e.t.c. must work together. All marketing functions must be
integrated from the customer’s point of view.

• Marketing must be embraced by the other departments. They must also think customers to foster
teamwork among all departments. The company carries out internal marketing as well as external
marketing.External marketing is marketing directed at people outside the company while internal
marketing is the task of hiring, training and motivating able employees who want to serve
customers well.

4) Profitability
The ultimate purpose of the marketing concept is to help organizations achieve their objectives.
Profitability should be the bench-mark or the ultimate arbiter of success.

5) Societal Marketing Concept

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This holds that the organization should determine the needs, wants and interests of target markets. It
should then deliver the desired satisfaction more effectively and efficiently than competitors in a way that
maintains or improves the consumers and the society well-being.

According to the societal marketing concept a pure marketing concept overlook possible conflicts between
short-run consumer wants and long-run consumer welfare.

The societal marketing concept calls upon marketers to balance three considerations in settling their
marketing policies i.e. company profit, consumer wants or needs and society interests.

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 Company Profits

Societal

Marketing

Concept
Consumer Society interests
Needs/wants

Originally most companies based their marketing decisions largely on short-run company profit.
Eventually they begun to recognize the long-run importance of satisfying consumer wants and the
marketing concept emerged.

1.5 MARKETING AND CHANGE (STRATEGICMARKETING TRIANGLE)

Marketers need to attend to the strategic triangle: customer, competitors and the company (and its
stakeholders) in order to address the new challenges facing businesses including: new customer
expectations, new competitors, ways of doing business and new types of organization. The strategic
triangle can be illustrated as shown in the diagram below:

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 Company

Internal External
Marketing marketing
programme programme
Plans

Employees Customers
Interactive marketing

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The reason why businesses and firms need a competitive orientation is that customers have a choice,
and they can compare the firm’s offering with what competitors are offering.

TOPIC TWO

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ENVIRONMENTAL ANALYSIS

A company’s marketing environment consists of the actors and forces outside marketing
that affect marketing management’s ability to develop and maintain successful
transactions with its target customers. The marketing environment offers both
opportunities and threats. They influence marketing activities of a firm. They affect the
team’s ability to develop and maintain successful relationships with their target market.
It has three main categories:

Internal Marketing Environment

The internal environment is made up of factors within the firm itself. Examples include:

 employees – their skills, attitude, commitment, creativity and innovativeness

 company policy and strategies,
 capital assets,
 the firm's structure and
 The firm's products (materials).
 Top management – leadership and value systems
 Management philosophy
 Networks and partnerships established at the top level of management
These factors can be controlled by the firm and they influence a lot of marketing decisions. For example:
Marketing managers make decisions within the plans made by top management and
marketing plans must be approved by top management before they can be
implemented.

Micro Environment Marketing Environment

The microenvironment is made from individuals and organizations that are close to the company and
directly impact the customer experience. Examples would include the company itself, its suppliers, other
marketing input from agencies, the markets and segments in which your business trades, your
competition and also those around you (which public relations would call publics) who are not paying
customers but still have an interest in your business. The Micro environment is relatively controllable
since the actions of the business may influence such stakeholders.

i) The Company
In designing marketing plans, marketing management takes other company groups
into account – groups such as top management, finance, R & D, purchasing,
manufacturing and accounting. All these inter-related groups form the internal
environment e.g. Top management sets the company’s mission, objectives, broad
strategies and policies. Marketing managers make decisions within the plans made

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 by top management and marketing plans must be approved by top management
before they can be implemented.

ii) Suppliers
They are an important link in the company’s overall customer value delivery system.
They provide the resources needed by the company to produce its goods and
services. Supplier’s problems e.g. supply shortages or delays, labour strikes and other
events can cost sales in the short run and damage customer satisfaction in the long
run. Rising supply costs may also force price increases that can harm the company’s
success volume.

iii) Customers
The company needs to study its customer markets closely i.e. consumer markets,
business markets, research markets, government markets and international markets.

iv) Competitors
The marketing concept states that to be successful, a company must provide greater
customer value and satisfaction than its competitors do. This marketers, must do more
than simply adapt to the needs of target customers. They also must gain strategic
advantage by positioning their offerings strongly against competitors’ offerings in the
minds of consumers.

No single competitive marketing strategy is best for all companies. Each firm should
consider its own size and industry position compared to those of its competitors. To
succeed, an organisation must make effective moves and counter-moves, ones that
maintain or advance the company’s position in the marketplace and that cannot be
easily nullified by competitor’s responses

v) Marketing intermediaries

Marketing intermediaries help the company to promote, sell, and distribute its goods to final buyers. They
include resellers, physical distribution firms, marketing services agencies, and financial intermediaries.
Resellers are distribution channel firms that help the company find customers or make sales to them.
These include wholesalers and retailers, who buy and resell merchandise. Selecting and working with
resellers is not easy. No longer do manufacturers have many small, independent resellers from which to
choose. They now face large and growing reseller organizations. These organizations frequently have
enough power to dictate terms or even shut the manufacturer out of large markets.

vi) Publics
A public is any group that has an actual or potential interest in or impact on an
organization’s ability to achieve its objectives. They include:-

 Financial publics – influence the company’s ability to obtain funds e.g. banks,
investments houses and stockholders.
 Media Publics – Carry news, features and editorial opinion e.g. newspapers,
magazines, radio and television stations.
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  Government publics – management must take government developments into
account. E.g. marketers must often consult the company’s lawyers on issues of
product safety, truth in advertising etc.
 Citizen action publics – a company’s marketing decisions may be questioned by
consumer organizations, environmental groups, minority groups etc. Its public
relations department can help it stay in touch with consumer and citizen groups.
 Local publics – include neighborhood residents and community organizations.
Large companies usually appoint a community relations officer to deal with the
community, attend meetings, answer questions and contribute to worthwhile
census.
 General public – A company needs to be concerned about the general publics
attitude toward its products and activities. The public’s image of the company
affects its buying.
 Internal publics – include workers, mangers, volunteers and the board of
directors. Large companies use newsletters and other means to inform and
motivate their internal publics. When employees feel good about their company
this positive attitude spills over to external public.

2.2 The Company’s Macro-Environment

The macro environment is less controllable. The macro environment consists of much larger all-
encompassing influences (which impact the microenvironment) from the broader global society. Here we
would consider culture, political issues, technology, the natural environment, economic issues and
demographic factors amongst others

i) Demographic Environment
Demography is the study of human populations in terms of size, density, location,
age, gender, race, occupation and other statistics. The demographic environment is
of major interest to marketers because it involves people and people make up
markets. Demographic trends of concern include:-

 Changing age structure of the population

 The changing family set up
 Geographic shifts in population
 Better educated population
 Increasing diversity

ii) Economic Environment

Markets require buying power as well as people. The economic environment consists of
factors that affect consumer purchasing power and spending patters. Marketers must
pay close attention to major trends and consumer spending patterns both across and
within their world markets.

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iii) Natural Environment (Ecological Factors)
The Natural environment involves the inputs by marketers or that are affected by
marketing activities. Marketers should be aware of several trends in the natural
environment e.g.: water, oil etc.

 Increase pollutions e.g. disposal of chemical and nuclear wastes, non-bio-

degradable plastics etc.
 Increased government intervention in natural resource Management etc.

iv) Technological Environment

Technological forces are developments in technology in the external environment that

can impact on organization in two ways.

a) Technological developments can influence an organization use of knowledge an

organization use of knowledge nd technique in producing a product or service
and in performing other work.
b) Technological developments also affect the characteristics of an organization
products or services.

Thus forces that create new technologies create new product and market opportunities.
These forces require that marketers keep abreast of the latest development and where
possible incorporate advancements to maintain the organisation’s competitiveness.
This challenge is made move difficult by the quickening pace of technological change.

v) Political – Legal Environment

The political environment consists of laws, government agencies and pressures groups
than influence or limits various organizations and individuals in a given society. New
laws and their enforcements will continue to increase. Business executives must watch
these developments when planning their products and marketing programs. Marketers
need to know about the major laws protecting competition, consumers and society.
They need to understand these laws at the local, state, national and international levels.

vi) Social – Cultural Environment

This is made up of instructions and other forces that affect a society’s basic values,
perceptions, preferences and behaviours. The cultural characteristics that can affect
marketing decision making include:-

 Persistence of cultural values e.g. most Americans believe in working, getting

married, giving to charity and being honest.

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  Shifts in secondary cultural values e.g. the impact of popular music groups, movie
personalities and other celebrities on young people hairstyling, clothing and
sexual norms. Marketers want to predict cultural shifts in order to spot new
opportunities or threats etc.

THE SWOT ANALYSIS

SWOT analysis is a tool for auditing an organization and its environment. SWOT analysis is the first stage
of planning and helps marketers to focus on key issues. Strengths and weaknesses are internal SWOT
factors. Opportunities and threats are external SWOT factors. Strength is a positive internal factor. A
weakness is a negative internal factor. An opportunity is a positive external factor. A threat is a negative
external factor. We should aim to turn our weaknesses into strengths, and our threats into opportunities.
SWOT will give managers options to match internal strengths with external opportunities. The outcome
should be an increase in ‘value’ for customers – which hopefully will improve our competitive advantage.
The main purpose of SWOT analysis has to be to add value to our products and services so that we can:

 recruit new customers,

 retain loyal customers, and
 extend products and services to customer segments over the long-term
Simple rules for successful SWOT Analysis

 Be realistic about the strengths and weaknesses of your organization

 SWOT analysis should distinguish between where your organization is today, and where it could
be in the future.
 SWOT should always be specific. Avoid grey areas.
 Always apply SWOT in relation to your competition
 Avoid complexity and over analysis
 SWOT analysis is subjective. To achieve much make it segment specific.
(Used together with other tools such as: PESTEL analysis, Porters five forces model, Stakeholder
analysis)

RESPONDING TO THE MARKETNG ENVIRONMENT

 Response to the marketing environment depends on the nature of the marketing

environment and the attitude of the company to the marketing environment. A
marketing environment can either be friendly, hostile, too competitive. “There are three
kinds of companies: those who make things happen, those who watch things happen, and
those who wonder what’s happened.”
 Many companies view the marketing environment as an uncontrollable element to which they
must react and adapt. They passively accept the marketing environment and do not try to change
it.

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 They analyze the environmental forces and design strategies that will help the company avoid the

threats and take advantage of the opportunities the environment provides.
Marketers and organizations can respond in three basic ways to their environment –

o Proactive – The Company tries to influence the environment factors

o Passive – The Company continually adapts to the environment changes
o Reactive – the wait for things to happen and then you take action
 A reactive response involves changing the marketing mix in response to environmental changes.
This is the most common type of response. The best organizations are able to respond quickly to
environmental changes and capitalize on them. In reacting to changes in your external
environment, marketers should still be driven by an overarching vision, mission, and strategy which
provide clarity in how to react to change with tactics that are adaptive and responsive.
 A less common response is to be proactive, or to try to change the environment before it changes
the marketplace. For example, a pharmaceutical company may employ lobbyists to change laws
related to their business. Rather than simply watching and reacting, these firms take aggressive
actions to affect the publics and forces in their marketing environment. Such companies hire
lobbyists to influence legislation affecting their industries and stage media events to gain favorable
press coverage.

They run advertorials (ads expressing editorial points of view) to shape public opinion. They press
lawsuits and file complaints with regulators to keep competitors in line, and they form contractual
agreements to better control their distribution channels.

TOPIC THREE

ANALYZING BUYER BEHAVIOUR

Introduction to Consumer behaviour

Consumer behavior is a discipline that enables an organization and its management to understand
customers in terms of:

◦ Who the customers are?

◦ What they buy?
◦ Why they buy?
◦ What influences their purchases?
◦ Where they buy?
◦ When they buy?
◦ How often do they buy?
◦ In what quantities do they buy?
◦ How they buy?
Customer behaviour study is based on consumer buying behaviour, with the customer playing the three
distinct roles of user, payer and buyer. Consumer behaviour is the process through which the ultimate

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buyer makes purchase decisions. This can be defined as the processes involved when individuals or
groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy needs and
desires (Solomon, 1996). Those actions directly involved in obtaining, consuming and disposing of
products and services, including the decision processes that precede and follow those actions (Engel et al.
1995). Consumer behaviour examines mental and emotional processes in addition to the physical
activities of consumers.

Characteristics/Factors Affecting Consumer Behaviour

External factors

This covers factors that are external to consumers. They include:

◦ Macro environmental factors – discussed earlier

◦ Micro environmental factors – discussed earlier
◦ Marketing mix – these are the controllable variables of any company including price,
place, promotion, product, people, physical evidence and processes.
Each of the highlighted factors has an implication on buyer’s behavior. For example

 Macro environmental factors such as economic factors influence the purchasing power of the
customers this way influencing how much they are willing to spend and at the same time the
quantities they are willing to buy, when and where.
 Macro- economic factors such as social cultural factors influence what is acceptable within a
specific social setting. This influences what members of such communities consume and also
what they buy
 Micro economic factors such as competitors influences the number of alternative or substitute
products that are available to the consumers. This way they provide a wide variety which gives
customers choice.
 The power of the supplier influences the prices set on inputs and this influences the finished
products prices. This has a bearing on what customers can buy and the quantity.
 The price charged on a product will determine whether a customer buys or not especially in a
price oriented market
The level of promotion that is used to encourage buyers to buy the product also influence consumers
purchase.

Individual Characteristics
These are factors that are internal to an individual consumer and also those relating to his socialization as
well as interactions. They include:

◦ Psychological factors – motivation, learning, perception, attitude,

◦ Personal factors - age, economic status, occupation, lifestyles, self concept, personality
◦ Social factors – roles and responsibility, family, social class, reference group, social status
◦ Cultural factors – socialization, where you were brought up, the norms, religious beliefs
Each of the listed factors has an influence on what we buy, when, where and why. For example

 Customers with positive attitude towards a brand will choose it from other competing products
regardless of the prices.

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  When a consumer is buying items to be used by all members of the family, the final decisions is
influenced mainly by the preference of the majority of the family members.
 When purchasing, customers tend to make judgment based on what they have heard from
friends, peers, family members or their role models.
The age of a consumer determines what they have to buy and why for example, a young person will buy
what is fashionable and acceptable among their age mates.

BUYER DECISIONS MAKING PROCESS

 These are the steps that a customer goes through before he respond with a specific response to
the stimuli influencing his purchases.
 It indicates that consumer purchase is not one off action but it involves various stage.
 The time taken to make a purchase decision is determined by:
◦ Importance of the product
◦ The value of the product – measured in price
◦ How often the product is bought
◦ Level of information that the customer has
◦ Accessibility of the product
The process includes the following steps

 Problem recognition or need identification – purchase are made to satisfied needs and desires
currently not satisfied
 Information search – external sources and internal sources. Determine information sources for
your customers
 Alternative evaluation – evaluated against customers expectations such as quality, price,
quantity, uses, as well as the attitude of others especially those who are close to them or
unexpected situational factors such a scarcity.
 Purchase decision – this can be for trial or repeat purchase. The marketer must understand the
factors that provoke feelings of risk in consumers and must respond with information and
support that will reduce the perceived risk.
 Post purchase behavior - This is determined by the level of satisfaction or dissatisfaction of the
consumer after purchasing, consuming or using the product or service. A dissatisfied consumer
can react in a number of ways:
 She can decide not to buy again;
 The consumer can talk negatively - negative publicity;
 Demand a refund;
 Take legal action
 This would result in loss of customers requiring the organization to invest heavily in order to get
new ones.
 A satisfied consumer can react in a number of ways:
 She can decide to buy again (repeat purchase or become a regular user;
 The consumer talk positively – positive publicity – which attract other customers for the
organization
 Become a loyal customer cutting costs for the business as they do not have to spend more
money to convince them.

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CONSUMER ADOPTION PROCESS
The adoption process focuses on the mental process through which an individual passes from this first
hearing about an innovation to final adoption.

 Awareness:- The consumer becomes aware of the innovation but lacks information about it.
 Interest:- The consumer is stimulated to seek information about the innovation
 Evaluation:- The consumer considers whether to try the innovation.
 Trial:- The consumer purchases the innovation improve his/her for trial to estimate of its value
 Adoption: - The consumer decides to make full and regular use of the innovation. However, it is
important to note that consumers do not adopt a new innovation at the same rate. As a result,
consumers can be categorized into the following adopters categories:
 Innovators (2.5%) – Are venturesome i.e. they are willing to try new ideas at some risk
 Early adopters (13.5%) –guided by respect i.e. they are opinion leaders in their community
and adopt new ideas early but carefully.
 Early majority (34%) – Are deliberate i.e. they adopt new ideas before the average person
although they are rarely leaders.
 Late majority (34%) – Are skeptical i.e. they adopt an innovation only after a majority of
people have tried it.
 Laggards (16%) – Are tradition bound i.e. they are suspicious of changes, mix with other
tradition bound people and adopt the innovation only when it takes on a measure of tradition
itself.

Summary
Consumers behave differently depending on what they are buying, time available, how often the product
is bough, the value of the product and the importance. In this case consumers’ portray routine, complex,
variety seeking and impulse buying behaviours. Consumer behaviour therefore enables managers to
understand consumers when buying, acquiring, consuming or accessing specific products or services.
Consumer behaviour is influenced by a variety of factors including marketing mix, macro environmental
factors, psychological factors, social factors, cultural factors as well as individual characteristics. A
consumer purchase decision is process consisting of various stages including: need recognition,
information search, evaluation of alternatives, purchase and post purchase decision. These steps are
integrated when a customer is buying a new innovation, through the adoption process consisting of
awareness, interest, evaluation, purchase for trial, future purchases which can be repeat purchases or
regular purchases(adoption) depending of the level of satisfaction.

TOPIC FOUR

MARKET SEGMENTATION, TARGETING AND POSITIONING (STP)

Market Segmentation
 Market segmentation is the process of dividing a total heterogeneous market for a good or
service into several segments. Each of which tends to be homogeneous in all significant
aspects.

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  It may be defined as a process of splitting or dividing potential customers into certain
groups or segments sharing similar levels of needs. The definition explains that the process
is simply a division of markets into target groups.
 It is creating sub-sets of a market based on similar characteristics of consumers with
similar demands and providing them with a product to satisfy their need in a much better
way than it could have been otherwise.
 The process that involves aggregating prospective buyers into groups that have common
needs and will respond to similar to a marketing action.

Why segment markets:

 It allows a business to vary its marketing mix and promotion to different segments of its target
market
 Segmentation helps a company focus on the needs and desires of the customers most likely to
purchase its products.
 It also helps a business identify and understand its competition
 It also can have a higher ratio of marketing dollars spent to dollars returned to the business.
Some of the factors that have made organizations opt for segmentation include:

 globalization,
 increased numbers of competitors,
 more diversity among customers,
 technology,

Factors to consider when segmenting

1. Size- Find out if the segment is actual or potential or of sufficient size to justify the
development of a differentiated marketing strategy
2. Incremental cost- The additional cost to incur in seeking satisfy a particular segment and if
they will be recovered with additional profit over that which could be anticipated if the
market were not segmented in the first place
3. Size of intersegment differences- The greater the size of the intersegment differences the
more the justification for segmentation and treating segments as separate markets.
4. Durability of differences- the longer the differences last between the segments the
greater the justification for distinguishing them.
5. Cyclical volatility-the more stable a segment the better.
6. Compatibility with other segments- it should seek to define segments which are mutually
reinforcing rather than in opposition to one another
7. Degree of fit- the company should seek to build up on its strengths
8. Degree of competition- the best segments are those in which there is an absence of direct
competition

Steps in the Segmentation Process

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  Define and analyze the market—determine market parameters (based on characteristics that may
include or exclude customers from a group).
 Identify and describe potential segments—decide on the most useful dimensions or variables for
selecting members of potential market segments; then aggregate customers into homogeneous
groups, develop a profile of the characteristics of each group, etc.
 Select the segment(s) to be served—select segments by evaluating against predetermined criteria,
then rank according to the organization’s ability to serve the market profitably while providing
customer satisfaction.
 Determine the product positioning strategy—determine the best “fit” between a product and a
market according to features most desired by customers; consider competitors’ positioning
strategies, organizational goals, and the market situation.
 Design and implement the marketing program—develop a tactical plan (marketing mix) and
determine objectives for the marketing program; all elements of the marketing mix must be
consistent with the selected positioning strategy.

Bases for Segmenting Consumer Markets

1. Geographic Segmentation is known as Geographic Segmentation. Examples of such
A market segmented into sub-markets on the basis of geographic location division are nations, states,
regions, provinces, districts, counties, cities or even neighbourhoods. An international firm may divide its
market on the basis of nations and then move further down to the level of cities and neighbourhoods. A
national company may start with at the level of counties/regions and move down to cities and other sub-
levels. Geographic segmentation is important as there are many factors contributing to the varying needs
of consumers across different regions of the world. For example E.A.B.L distributes products such as
Álvaro and Malta in areas like Garrisa where non-alcoholic beverages are sold.
2. Demographic Segmentation
A market split into sub-segments on the basis of variables such as age, gender, family, income, education,
religion, culture, occupation, profession, ethnicity etc is known as demographic segmentation. To make it
simpler, it is the division of market on the basis of demographics. We will discuss each variable briefly
here.
Age: This is one of the most effective ways of demographic segmentation. Modern firms use this as a very
useful marketing tactic to create and retain their customers’ right from birth to death.
EABL different advertisements and media campaigns target people of different ages such as children,
teens, adults and senior citizen.
Ethnic Segments: The multi-cultural societies’ potential customers may all be located in the same
geographic location but their needs and wants and ways to satisfy these needs and wants are different.
Companies have successfully segmented their markets on ethnic basis all over the world in areas where
the demand needs to be met that way. For example Kenya Commercial Bank has the sharia-compliant
account [interest free] for the Muslim community.
Gender: Gender segmentation is another powerful and successful segmentation and can be seen in areas
like clothing, cosmetics, beauty products, hair styles, careers, cars, insurance and now even education.

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Perfume companies target men and women separately with their various model and brands Girls like pink
bags while boys may go for blues or blacks. .
There is a huge scope of demographic segmentation and is not limited to age, ethnicity and gender only.
Other bases for this type of segmentation are like Life Cycle Stage, Income groups, sexual orientations,
family size, education and many others.
3. Psychographic Segmentation
Life style, social class and personality may be the basis for psychographic segmenting of markets.
Examples of life styles segments would be people drinking coffee or tea, weight watchers, seekers of less
fatty food. Products based on life styles may be highly customized to appeal to a particular way of life.
Younger people’s life-style requirements may be a great deal different than of those who are above their
age group. Examples of social class segments are holidays, hotels and air travel tickets targeting people of
a particular class. The consumer in psychographic segmentation may have the same income level and
gender but they may have different inclinations and a unique style of living. They may have different
personalities determining their likes and dislikes for a particular class of products.
4. Behavioural Segmentation
Behavioural segmentation is based on the variables of the actual behaviour of the consumer. For instance,
some users may be classed as heavy users while others as light users. Some may be just first time user
while other are occasional users only. To summarise the behavioural segment may consist of the following
variables: user status, usage rate, benefits sought, occasions, brand loyalty, e.t.c.
5. Multi-attribute segmentation – where you combine more than one method of segmentation, e.g.
Demographic and geographic segmentation together.

Effective Market Segmentation

 The five main requirements of a market segment to ensure that it is effective are that they must
be measurable, actionable, accessible, substantial and differential. If each of these requirements
are met market segmentation is likely to occur in a successful and effective way.
 Measurable. A market segment must be measurable in terms of its size, purchasing power and
profiles.
 Actionable. In order for effective segmentation to occur a market segment must also be
actionable. This means that effective programs can be designed for serving and attracting the
segments.
 Accessible. They should be easy to reach and serve.
 Substantial. For effective segmentation, a market segment should be large or profitable enough
to serve. They should be the largest possible homogeneous group that is worth pursuing with a
marketing program that has been tailored.
 Differential. Market segments need to be distinguishable conceptually and must respond in
different ways to the different marketing mix programs and elements.
These requirements help determine whether market segments will contribute towards effective
segmentation or not. Breaking down the requirements into these categories allows them to beanalyzed
and addressed individually to make the process as efficient as possible.

TARGET MARKETING
After segmenting the markets into various potential segments, the company should then evaluate the
various segments. It should then select the target segments and decide which market strategy it will
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adopt. Target marketing focuses on directing your marketing endeavors toward a group of people. After
dimensions have been selected to use in defining the segments, segments then must be identified in the
market under study.

A target market is a group of customers that the business has decided to aim its marketing efforts and
ultimately its products and services towards.

Evaluating and Selecting Target Segments

Several factors are considered when evaluating probable target segments

1. Size and Growth: A company should find out what is the size of the market potential of
each market segment. The growth characteristic of the market segment can be easily
worked out once a long term market demand or market potential is forecasted. This
analysis will indicate what is the size and estimated market growth of each segment.
2. Profitability Analysis: The steps involved in estimating profitability of each potential
market segments are as follows:
a) Identify major activities that are relevant to sales and distribution costs
b) Convert the natural or traditional expenses into functional expenses.
c) Allocate functional expenses to market expenses
3. Prepare profitability of each market segment Competitive Analysis: Profit Potential and
the ability of an industrial marketer to penetrate a particular market segment depends on
careful analysis of the strengths and weaknesses of existing or potential competitors both
domestic and foreign.

4. Company Objectives and Resources: An industrial firm should ask itself whether each
potential segment is in line with the firms long term objectives, if not some segments
should be eliminated. A company will succeed in a segment if it has certain resources or
strengths which are superior to competitors

5. Role of brand - Would the firm be required to create a new brand, or could an existing
brand be leveraged into the new target market, or is brand relatively unimportant?

6. Competitors - How dominant are the established competitors? What degree of

competitive rivalry exists? Are there significant indirect competitors (or close substitute
products)?

7. Distribution channels - How easy would it be to gain access to the appropriate

distribution channels? What level of new investment would be required in this regard?

Advantages of Targeting
Small companies have broad targeting advantages in marketing when they properly identify their key
customers. This process involves studying key characteristics

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personalities and buying behaviours of customers. That way business can better meet the needs of their
customers. Companies that use target marketing also know when certain trends or changes impact the
tastes and preferences of their core customers. They can then adjust their marketing strategies
accordingly.

Products: One advantage of target marketing is the ability to offer the right products. A product
manager who properly targets her customers knows their age range. She focuses on products that meet
their needs, solve their problems or help them in some way. For example, in multichoice the bouquets
have channels that target different age groups like cartoons for children and documentaries for old folks.

Price: Companies that target their customers in marketing are also more informed about the prices
customers will pay for products and services. Savvy marketers know the average incomes of their primary
customers. They have a general idea if their customers are price sensitive or not. Small-business owners
can better support their understanding of customer price sensitivity through marketing research. This can
be accomplished by asking customers the maximum prices they would pay for certain products in a phone
survey, for example DSTV targets high and medium income earners and GOTV targets middle income
earner

Advertising: Small-business owners who implement target marketing are usually more efficient and
effective with their advertising. They are more efficient because they don't waste money advertising to
people outside their target audience. Companies using target marketing are more effective because they
reach the right consumers with messages that are more applicable. Small companies can also choose the
best media sources for their advertising by targeting certain customers. Most media companies inform
their advertisers of the demographic groups they typically reach. For example, GOTV is mostly advertised
in local radio stations

Geography: Small companies that use target marketing also know where their customers live. Business
owners operating locally may be able to pinpoint certain neighborhoods from which they attract business.
Moreover, customers' tastes and preferences vary in different geographical regions. Companies can be
more efficient in meeting those customers' preferences through target marketing. For instance DSTV and
GOTV mobile devices are preferred mostly by residents in the urban centres than in the rural centres.

Target Market Strategies

your target markets is very important.

There are three general strategies for selecting your target markets:

• Undifferentiated Targeting: This approach views the market as one group with no individual
segments, therefore using a single marketing strategy. This strategy may be useful for a business or
product with little competition where you may not need to tailor strategies for different preferences.
• Concentrated Targeting: This approach focuses on selecting a particular market niche on which
marketing efforts are targeted. Your firm is focusing on a single segment so you can concentrate on
understanding the needs and wants of that particular market intimately. Small firms often benefit
from this strategy as focusing on one segment enables them to compete effectively against larger
firms.

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• Multi-Segment Targeting: This approach is used if you need to focus on two or more well defined
market segments and want to develop different strategies for them. Multi segment targeting offers
many benefits but can be costly as it involves greater input from management, increased market
research and increased promotional strategies

MARKET POSITIONING
 Positioning is how the firm wants its product or services to be perceived by the target
customers. For example multi-choice is perceived as the best in the coverage of live
football games
 Positioning is developing a product and brand image in the minds of consumers. It can
also include improving a customer's perception about the experience they will have if
they choose to purchase your product or service. The business can positively influence
the perceptions of its chosen customer base through strategic promotional activities and
by carefully defining your business' marketing mix.
 Effective positioning involves a good understanding of competing products and the
benefits that are sought by your target market. It also requires you to identify a
differential advantage with which it will deliver the required benefits to the market
effectively against the competition. Business should aim to define themselves in the eyes
of their customers in regards to their competition.
 Market positioning is the manipulation of a brand or family of brands to create a positive
perception in the eyes of the public.

Benefits of Market Positioning

• Good positioning cements the product in the customer's awareness. It gives the customer information
about the product in a unique way that resonates and states their mind forever. If executed correctly,
positioning creates value, ensuring that customer will pay more for the product because they
understand and agree with the product's position. This execution requires using advertising to explain
to consumers the similarities and differences between the product and competing products so that
customers understand why they should pay a premium. For instance DSTV packages are better
because of the supersport live matches as opposed to zuku.

• Companies can choose to extend their positioning to create a brand. A brand is a company name that
labels a product or family of products and carries a distinct position in the minds of customers. Brands
that customers see as positive command premium prices. Brands can extend their market position to
new products that the parent company introduces. This is an advantage over companies who don't
have brand positioning because unbranded new offerings can't command a premium. For example
multichoice brands include DSTV, GOTV, DSTV mobile and GOTV mobile.
• If customers see enough positive differences between a product position and its competitors
position the product becomes differentiated. This means that the product has the competitive
advantage and many customers believe that the product performs better and in ways that competing
products cannot perform. The customer may feel that they have an advantage over other people who
don't use the product. Customers who tell others about this advantage further differentiate by making
word-of-mouth category claims, enhancing the product's position and spreading favorable

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 information about the brand. DSTV has the best channel listing ranging from sports, movies,
documentaries as opposed to other digital providers.
• It increases sales for the organization
• It provides brand visibility
• Can give a company competitive advantage

Positioning Strategies

 Positioning on specific product features -If your product or service has some unique features that
have obvious value this may be the way to go.
 Positioning on benefits - Strongly related to positioning on product features. Generally, this is
more effective because you can communicate to your customers about what your product or
service can do for them. The features may be nice, but unless customers can be made to
understand why the product will benefit them, you may not get the sale.
 Positioning for a specific use - Related to benefit positioning. E.g. The blue band advert. This
works best when you can teach your customers how to use your product or when you use a
promotional medium that allows a demonstration.
 Positioning for user category - A few examples: "You've Come a Long Way Baby," "The Pepsi
Generation" and "Breakfast of Champions." Be sure you show your product being used by models
with whom your customers can identify.
 Positioning against another product or a competing business - A strategy that ranges from
implicit to explicit comparison. Implicit comparisons can be quite pointed; for example, Avis never
mentions Hertz, but the message is clear. Also Orange and Safaricom. Explicit comparisons can
take two major forms. The first form makes a comparison with a direct competitor and is aimed at
attracting customers from the compared brand, which is usually the category leader. The second
type does not attempt to attract the customers of the compared product, but rather uses the
comparison as a reference point.
 Product class disassociation - A less common type of positioning. It is particularly effective when
used to introduce a new product that differs from traditional products. Lead-free gasoline and
tubeless tires were new product classes positioned against older products. The trick is to find out
who are the potential brand switchers or experimenters and find out what it would take to get
them to try your product or service. The obvious disadvantage of dealing with those who try new
products is that they may move on to another brand just as easily. Brand loyalty is great as long as
it is to your brand.
 Hybrid bases - Incorporates elements from several types of positioning. This is particularly true in
smaller towns where there aren't enough customers in any segment to justify the expense of
separate marketing approaches.


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TOPIC FIVE

MARKETING INFORMATION SYSTEMS AND FORECASTING

LECTURE FIVE

5.1 INTRODUCTION
The quality of the decisions made within organizations, are dependent on the quality of information that
the decisions makers have. The purpose this lecture there is to enable the learner to appreciate the
importance of marketing information systems and describe the ole that they play in ensuring the
information is provide to the decision makers at the right time, in the right quality and in the right format.
This lecture therefore focuses on components of marketing information systems, sources of marketing
information systems, marketing research and their relevance in decision making.

COMPONENTS OF MARKETING INFORMATION SYSTEMS

• A marketing information system is a system which analyses and assesses marketing information,
designed to support marketing decision-making. This information is gathered continuously from
sources inside and outside an organization. Management has five distinct functions and each
requires support from an MIS. These are: planning, organising, coordinating, decisions and
controlling.
• According to Jobber (2007) Marketing Information system is a "system in which marketing data is
formally gathered, stored, analysed and distributed to managers in accordance with their
informational needs on a regular basis.
• Kotler, et al. (2006) defines it as "people, equipment, and procedures to gather, sort, analysed,
evaluate, and distribute needed, timely, and accurate information to marketing decision makers.”
Role of MIS

 Timely Market information provides a basis for monitoring & evaluating emerging market trends.
 Market information forms a basis for demand forecasting i.e. how much the market can consume.
 Market information assist in identifying segmentations in the market this can be useful in
customizing products to meet market demands.
 MIS identifies marketing opportunities & strategies
 It helps an organization realise the forces affecting the marketing activity and the impact of these
forces. These forces could be external or internal; controllable or uncontrollable.
 It provides a basis for decisions such as productdevelopment or improvement, pricing, packaging,
distribution, media selection, and promotion.

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INTERNAL RECORDS
Information collected over time from a company’s customers, however its underutilized/unappreciated as
most organizations do not see it value. For example from invoices you can get information on:

- Highest selling product type per region: identifies market niches for different products.
- Highest selling pack type/size – Identifies the acceptable pack size among your consumers.
- Volumes sales per territory - Identifies which areas to increase marketing initiatives
- Volume of sale by sales persons- Identifies skilled/competent workers.
Volume of sale per customer- Identifies committed Customers

MARKETING INTELLIGENCE SYSTEM

A marketing intelligence system is a set of procedures and data sources used by marketing managers to
sift information from the environment that they can use in their decision making. Ways of gathering
market intelligence include:

a) Unfocused Scanning -Magazines, Newspapers, Journals, talking to customers, producers &

Suppliers. Its generally observing and conversing.
b) Semi-Focused Scanning - More deliberate, train sales force to note Customers complaints,
request, issues raised by distributors & Competitors steps.
c) Informal Search- Encourage Intermediaries such as Collectors, retailers, Traders & other
middlemen to collect Market intelligence.
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 d) Formal Search -
Critically focuses on the

- Competitive insight
- Market Insight
- The company can set-up customer advisory panels consisting of representatives of customers or
a company's largest customers or its most outspoken or sophisticated customers.
- The company can purchase information from outside suppliers such as Marketing Research Firms.
- The organization can establish a Marketing Information Center to collect information. The center
can be equipped with newspapers, radios, televisions, magazines etc all of which can be
harnessed continually to acquire information
The company can motivate distributors, retailers, and other intermediaries to pass along important
intelligence concerning the activities of competitors

MARKETING RESEARCH PROCESS

 Marketing Research is the systematic collection, analysis and reporting data and findings relevant to specific
marketing situations facing a company. This includes research on the effects of pricing, advertising and
other marketing variables.

 Five steps
1 2 3

Locating and Implementing

Designing the
defining issues the research
research project
or problems and Plan, Collecting and
research objectives Analyzing data

4 5

Interpreting Reporting
research findings research findings

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 DECISION SUPPORT SYSTEMS

 This concludes how the information gathered is used to make the Marketing decisions. This is an information
system that helps with decision making in the formation of a marketing plan. These are sets of
techniques that can help businesses form a decision about their product or service.
 The decisions can be based around whether they should keep a product or not, whether to move into new
markets or when to change a pricing strategy.
 The reason for using marketing decision support systems is because it helps to support the software
vendors planning strategy for marketing products. Marketing models available are mostly scientific &
Computerized, this include:
 Time series sales modes
 Brand switching models
 Linear programming
 Elasticity models (price, incomes, demand, supply)
 Regression and correlation models
 Analysis of Variance (ANOVA) models

CLASSIFICATIONS OF MARKETING INFORMATION SYSTEMS

 Planning systems – These provide information on sales, costs and competitive activity,
together with any kind of information which is needed to formulate plans.
 Control systems - These provide continuous monitoring of marketing activities and
enable marketing executives to identify problems and opportunities in the marketplace.
At the same time, they permit a more detailed and comprehensive review of
performance against plans.
 Marketing research systems - such systems allow executives to test decision rules and
cause/effect hypotheses. This permits the assessment of the effects of marketing
actions and encourages improved learning from experience.
 Monitoring systems - these systems provide management with information concerning
the external environment in which they are operating.

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FORECASTING DEMAND AND LEVELS OF MARKET MEASUREMENT

Demand forecasting
• A demand forecast is the prediction of what will happen to your company's existing product sales.
• The inputs from sales and marketing, finance, and production should be considered. The final demand
forecast is the consensus of all participating managers.
• You may also want to put up a Sales and Operations Planning group composed of representatives from the
different departments that will be tasked to prepare the demand forecast.
• To estimate current and future demand for the product, companies use estimates of market demand like
total market potential.
• Accurately projecting the demand for specific goods and services helps companies to order raw materials
and schedule production of those products in a timely manner, making it possible to fill consumer orders
quickly and efficiently without the need to build up a large inventory that adds to the tax burden of the
business.
• Analytical model enables marketers to analyse market data on customers, competitors, technology and
general marketing conditions.
• Based on historical sales & demand data, organizations can create long term demand forecasts which can
be used for capacity planning as well as shorter term estimates of demand which can be used for tactical or
operational planning of manufacturing, logistics and staffing.
Steps in Demand Forecasting
Determination of the demand forecasts is done through the following steps:
1. Identify the products that are to be considered as part of the forecast process. Doing so helps to create a
sense of focus for the effort and make it easier to gauge the public's recognition and attraction to those
products.
2. Set parameters for the demand forecast. Establish a specific time frame for the projection, such as the
beginning of the second quarter to the end of that same quarter in the upcoming business year. This makes
it easier to include events that are highly likely to occur in that time frame and have some effect on
consumer demand for the product under consideration.
3. Determine the target market for the product. The market may be composed of demographics that have to
do with age, gender, location or any other set of identifying characteristics desired.
4. Gather data relevant to the effort to forecast demand. Information such as a breakdown in population
within targeted areas, dividing by age groups or economic classes, can often help make it easier to
determine the approximate number of sales to anticipate during the period under consideration.
5. Calculate the actual forecast. While there are several different formulas used for this process, most will
require assuming that a fixed percentage of the target market will consume the product a certain number of
times during the forecast period.
Methods of Forecasting
• Qualitative approach: Used when the situation is vague and little data exists e.g. new products and
technologies. It involves intuition and experience. Techniques used in this approach are: Jury of execution
opinion, Sales force composite, Delphi methods and consumer market survey.
This is done if a company does not have historical data on products' sales.
1. Jury of executive opinion: The opinions of a small group of high-level managers are pooled and together
they estimate demand. The group uses their managerial experience, and in some cases, combines the
results of statistical models.
2. Sales force composite: Each salesperson is asked to project their sales. Since the salesperson is the one
closest to the marketplace, he has the capacity to know what the customer wants.
3. Delphimethod: A panel of experts is identified where an expert could be a decision maker, an ordinary

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 employee, or an industry expert. Each of them will be asked individually for their estimate of the demand.
An iterative process is conducted until the experts have reached a consensus.
4. Consumer market survey: The customers are asked about their purchasing plans and their projected buying
behaviour. A large number of respondents is needed here to be able to generalize certain results

• Quantitative approach: Used when the situation is stable and historical data exists. For example existing
products and current technology. It involves mathematical techniques and uses Time series and causal
models for calculation.
• This is done using the following methods
• Time series model: The forecast is based only on past values and assumes that factors that influence the
past, the present and the future sales of your products will continue.
• Causal model: It uses a mathematical technique known as the regression analysis that relates a dependent
variable (for example, demand) to an independent variable (for example, price, advertisement, etc.) in the
form of a linear equation.

Market Measurement
 Market measurement and market forecasting are management tools through which the markets which are
investigated are expressed in quantitatively measurable entities
 Market measurement focuses on the current size and characteristics, where as market
forecasting only looks at the future market situation.
Levels of Market measurement
 Consumer level: Provides information on the number of final users defined in different market
segments
 Product level: Provides information on the total number of current buyers of a product
 Geographical level: Dividing the total market into geographic terms and expressing measurements in
this terms
 Time levels: A market measurement should be specific in terms of the times of purchase and provide
information on the different time periods such a monthly, seasonal and annual sales

Methods of Market measurement

• The chain ratio method - This method involves the percentage calculation of the number of people who are
expected to buy the product in the future. This is called the buying intention
• Market build-up method - It involves the determination of all potential buyers of a product and the
quantity they will buy. These two figures are then multiplied to obtain the market potential for the
particular product.

TOPIC SIX

PRODUCT DECISIONS
PRODUCT AND SERVICE DECISIONS
 A product/service is a tangible good or intangible good that through exchange process satisfies
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 consumer or business customer needs.
 It is a bundle of attributes that a consumer is willing to sacrifice something to access, for use or
consumption
 Some product decisions include:
 Product Attributes/ Features: Developing a product or service involves defining the
benefits that it will offer. These benefits are communicated to and delivered by product
attributes such as quality, features, style and design.
 Product Quality: Product quality has two dimensions- Quality level- Features of the
product that will support the product's position (performance) in the target market.
Quality consistency- This is the freedom from defects and consistency in delivering a
targeted level of performance (conformance quality).
 Product Features: Features are a competitive tool for differentiating the company's
product from competitors' products. Consistent market survey can help a company
improve on the product feature
 Product Style and Design Style- simply describes the appearance of a product. Styles can
be eye catching or yawn producing. A sensational style may grab attention and produce
pleasing aesthetics, but it does not necessarily make the product perform better.
 Design- is more than skin deep--it goes to the very heart of a product. Good design
contributes to a product's usefulness as well as to its looks.
 Packaging: Packaging can be very expensive but important aspects to consider are: Size,
unit type, weight and volume.
 Labelling: This is the printed information that appears on or with the product. It does not
only serve to express the contents of the product, but may act as a promotional material.
 Branding: A brand is a name, term, sign, symbol, or design, or a combination of these
intended to identify the goods or services of one seller or group of sellers and to
differentiate them from those of competitors.
 Product support services: Most important in reviewing product service decisions is to
review the existing services and obtaining new ones. Also review the services and put
together a service that delights the customers and yield more benefits for the company.
Assess the value of current services and obtain ideas for new services. Survey customers
to determine satisfaction with current services and any desired new services.

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PRODUCT AND SERVICE LEVELS
The product levels help in defining a product in a better manner. A product can be divided into
three levels which are a series of different features and benefits that help in segmentation,
targeting and positioning, pricing and promotion etc.

Level one: Core Product: Also known as the benefits and is general intangible in nature. Core
products may vary depending on the objective of the organization. The car itself would not be
the core product. The core product would be convenience to the customers. Customers can
also travel by bus or taxi, but they may prefer cars because of convenience as well several times
because of status symbol. Thus the core product in case of the company will be convenience
and value for money whereas for another company it would be the status symbol.

Level two: Actual Product :After a decision has been reached by the firm on the core product,
the next step is the production/ Manufacturing of the actual product. Actual products are
quantifiable in nature and have properties like color, branding, quality etc. From the above
example, if your core product is a social status, the actual product will be a very high quality
expensive product but if the product is a convenience product, the production would be on the
basis of Value for money.

Level three: Augmented Product: These are the byproducts of the core and actual products.
They might be complete products within themselves. From our example above, a car needs
regular servicing, warranty etc. These become tertiary products or augmented products.

These three levels can be summarized in the diagram below-

NEW PRODUCT DEVELOPMENT
When developing a new product, a company should
 Identify all the features that are offered by all its major competitors.
 Second, identify important features/benefits used in making purchase decisions.
Determine the overall ranking of features by importance and relate the importance of
each feature to its "uniqueness".

For a new product to succeed in the market: it must have desirable qualities, uniqueness and
the features should be communicated to the users effectively.
A new product can be:

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  Continuous Innovation- There is no new buyer behaviour to learn, i.e. -products not
previously marketed by the firm, but by others.
 Dynamic/ Continuous Innovation- minor education needed for consumers to adopt
product.
 Discontinuous Innovation- entirely new consumption patterns.

New products fail due to-

 Lack of differentiating advantage
 Poor marketing plan
 Poor timing
 Target market too small
 Poor product quality
 No access to market

Stages in new product development

1. Idea generation: New ideas can be generated by:
 Conducting marketing research to find out the consumers' needs and wants.
 Inviting suggestions from consumers.
 Inviting suggestions from employees.
 Brainstorming suggestions for new-product ideas.
 Searching in different markets viz., national and international markets for new-product
ideas.
 Getting feedback from agents or dealers about services offered by competitors.
 Studying the new products of the competitors.

2. Idea screening: Most companies have an "Idea Committee." This committee studies all the
ideas very carefully. They select the good ideas and reject the bad ideas. Before selecting or
rejecting an idea, the following questions are considered or asked:
 Is it necessary to introduce a new product?
 Can the existing plant and machinery produce the new product?
 Can the existing marketing network sell the new product?
 When can the new product break even?

3. Concept testing: It is different from test marketing. In this stage of concept testing, the
company finds out:
 Whether the consumers understand the product idea or not?
 Whether the consumers need the new product or not?
 Whether the consumers will accept the product or not?

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Here, a small group of consumers is selected. They are given full information about the new
product and there feedback obtained.
4. Business analysis: Here, a detailed business analysis is done. The company finds out whether
the new product is commercially profitable or not. Under business analysis, the company finds
out.
 Whether the new product is commercially profitable or not?
 What will be the cost of the new product?
 Is there any demand for the new product?
 Whether this demand is regular or seasonal?
 Are there any competitors of the new product?
 How the total sales of the new product are?
 What will be the expenses on advertising, sales promotion, etc.?
 How much profit the new product will earn?

So, the company studies the new product from the business point of view. If the new product is
profitable, it will be accepted else it will be rejected.
5. Product development: The Company now decides to introduce the new product in the
market. It will take all necessary steps to produce and distribute the new product. At this stage,
all departments involved in the development to the final delivery of the product to consumers
come into play.
6. Test marketing: Test marketing means to introduce the new product on a very small scale in
a very small market. If the new product is successful in this market, then it is introduced on a
large scale. The success or failure of the product is then measured and decision for introduction
into the larger market is made.
7. Commercialization: If the test marketing is successful, then the company introduces the new
product on a large scale, say all over the country. The company makes a large investment in the
new product. It produces and distributes the new product on a huge scale. It advertises the new
product on the mass media like TV, Radio, Newspapers and Magazines, etc.
8. Review of market performance: The Company should continuously monitor the
performance of the new product. Below questions are important to ask-
 Is the new product accepted by the consumers?
 Are the demand, sales and profits high?
 Are the consumers satisfied with the after-sales-service?
 Are the middlemen happy with their commission?
 Are the marketing staffs happy with their income from the new product?
 Are the competitors introducing a similar new product in the market?
 Is the Marketing manager changing the marketing mix according to the changes in the
environment?

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PRODUCT LIFE CYCLE STRATEGIES
The product life cycle: The period of time over which an item is developed, brought to market and
eventually removed from the market. It has 4 very clearly defined stages, each with its own
characteristics that mean different things for business that are trying to manage the life cycle of their
particular products.

 Introduction Stage– This stage of the cycle could be the most expensive for a company
launching a new product. The size of the market for the product is small, which means sales are
low, although they will be increasing. On the other hand, the cost of things like research and
development, consumer testing, and the marketing needed to launch the product can be very
high, especially if it’s a competitive sector.
 Growth: in this stage
 costs reduced due to economies of scale
 sales volume increases significantly
 profitability
 public awareness
 competition begins to increase with a few new players in establishing market
 prices to maximize market share
 Maturity /saturation stage– this stage is characterized by:
 costs are very low as you are well established in market & no need for publicity.
 sales volume peaks
 increase in competitive offerings
 prices tend to drop due to the proliferation of competing products
 brand differentiation, feature diversification, as each player seeks to differentiate
from competition with "how much product" is offered
 very profitable
 Decline or Stability stage – this has the following features
 costs become counter-optimal
 sales volume decline or stabilize
 prices, profitability diminish
 profit becomes more a challenge of production/distribution efficiency than
increased sales

IMPLICATIONS OF PLC ON BUSINESS PLANNING BUDGETING

 At the introductory stage pricing can be geared at least to the recovery of costs, and possibly to
what the market will bear. As there is little or no competition, this is a time to be bold about prices.
 From the budgeting point of view, target for sales and profits should not be set too high at the
introductory stage but need to set a demanding level for the subsequent stage of growth.
 When the product reaches the growth stage, production needs to be planned at peak levels to meet
increasing sales; distribution needs to be geared up to moving goods to the point of sale as
efficiently as possible.

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 From the planning point of view, this is the period of peak activity to ensure that the product
realizes the benefits of maximum availability to the consumer at a time of minimum competition
from rival products.
 As sales increase and competition begins to appear this is the time to take advantage of the
flexibility of pricing, by reducing prices just at the moment when competitors have to bear their own
development costs. Budgets at this stage can set maximum profits targets with confidence.
 During the maturity stage competition will tend to be at its highest and this is a time for utilizing
advertising to help beat off the worst effects of this competition. It is also a time to consider further
reduction prices. At this stage both sales and profits will need to be budgeted at a lower level.
 At the saturation stage, as sales begin to stagnate, efforts can be directed towards a variety of sales
promotion activities to boost flagging sales and demoralize competitors by offering special offers to
both consumer and dealers etc.
 At this stage, earnings from the growth period can be used to support some of the costs incurred in
subsidiary sales. Profit targets should continue to be set but at a nominal level. By now production
resources should be curtailed considerably in the face of the slow-down in sales.
 As the decline stage approaches, budgeted costs should be set at the lowest possible levels as the
whole product life cycle begins to wind down for good. By now replacement products should be
well under way and another cycle about to begin.

PRODUCT POSITIONING STRATEGIES

 Positioning on specific product features -If your product or service has some unique features
that have obvious value this may be the way to go.
 Positioning on benefits - Strongly related to positioning on product features. Generally, this is
more effective because you can communicate to your customers about what your product or
service can do for them. The features may be nice, but unless customers can be made to
understand why the product will benefit them, you may not get the sale.
 Positioning for a specific use - Related to benefit positioning. E.g. The blue band advert. This
works best when you can teach your customers how to use your product or when you use a
promotional medium that allows a demonstration.
 Positioning for user category - A few examples: "You've Come a Long Way Baby," "The Pepsi
Generation" and "Breakfast of Champions." Be sure you show your product being used by
models with whom your customers can identify.
 Positioning against another product or a competing business - A strategy that ranges from
implicit to explicit comparison. Implicit comparisons can be quite pointed; for example, Avis
never mentions Hertz, but the message is clear. Also Orange and Safaricom. Explicit
comparisons can take two major forms. The first form makes a comparison with a direct
competitor and is aimed at attracting customers from the compared brand, which is usually the
category leader. The second type does not attempt to attract the customers of the compared
product, but rather uses the comparison as a reference point.
 Product class disassociation - A less common type of positioning. It is particularly effective when

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 used to introduce a new product that differs from traditional products. Lead-free gasoline and
tubeless tires were new product classes positioned against older products. The trick is to find
out who are the potential brand switchers or experimenters and find out what it would take to
get them to try your product or service. The obvious disadvantage of dealing with those who try
new products is that they may move on to another brand just as easily. Brand loyalty is great as
long as it is to your brand.
 Hybrid bases - Incorporates elements from several types of positioning. This is particularly true
in smaller towns where there aren't enough customers in any segment to justify the expense of
separate marketing approaches.

TOPIC SEVEN

PRICING DECISIONS
INFLUENCES OF PRICING DECISIONS
 Price is the value exchanged for a product or service in a marketing exchange.
 It is the opportunity cost that the customer is willing to incur to acquire, consume, possess or
use a good or service
 It is what the seller is willing to accept in exchange for his goods and services.
 Price represents the revenue earning side of the mix
Influences on pricing include:

 The customer – their purchasing behaviour, the factors influencing their purchases,
 Competitors – their current prices, their power in the market, type of the product they offer,
their strategies, (whether they maintain prices, reduce prices,
 Environment – economic, ecological, social cultural, technological, political and legal
 The company – costs, profit expectations, their market position, the type of product onoffer,
 Location of the target markets
 Company objectives

PRICING OBJECTIVES
 Pricing Objectives refer to the goal /aims an organization wants to achieve through pricing.
Pricing objectives provide guidance to decision makers in formulating price policies, planning
pricing strategies and setting actual prices. Once a pricing objective has been chosen, a pricing

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 strategy that meets the pricing objective must also be selected.
 The pricing objectives you select will guide your choice of pricing strategy. There is need to have
a firm understanding of product attributes and the market to decide which pricing objective to
employ.
 Pricing objectives can change depending on the business and market conditions hence do not
have to tie an organization. As business and market conditions change, adjusting your pricing
objective may be necessary or appropriate.
 Assigning product prices is a strategic activity. The price you assign will impact how consumers
view your product and whether they will purchase it.
 Price also helps differentiate your product from those of your competitors.
 However, the price you assign must be in line with your other marketing strategies and the
product attributes.
Pricing objectives includes:

 Profit maximization - seeks to maximize current profit, taking into account revenue and costs.
Current profit maximization may not be the best objective if it results in lower long-term profits.
 Current revenue maximization - seeks to maximize current revenue with no regard to profit
margins. The underlying objective often is to maximize long-term profits by increasing market
share and lowering costs.
 Maximize quantity - seeks to maximize the number of units sold or the number of customers
served in order to decrease long-term costs such warehouse costs
 Maximize profit margin - attempts to maximize the unit profit margin, recognizing that
quantities will be low.
 Quality leadership - use price to signal high quality in an attempt to position the product as the
quality leader.
 Partial cost recovery - an organization that has other revenue sources may seek only partial cost
recovery.
 Survival - in situations such as market decline and overcapacity, the goal may be to select a price
that will cover costs and permit the firm to remain in the market. In this case, survival may take
a priority over profits, so this objective is considered temporary.
 Status quo - the firm may seek price stabilization in order to avoid price wars and maintain a
moderate but stable level of profit
To arrive at specific pricing strategies, the following steps are followed:

 What mix of products are you offering? The mix of products you have available will
either limit or broaden the pricing strategies available for you to use.
 Who or what is your target market? The demographics of your target market will help you
identify appropriate pricing objectives and strategies. Are target customers interested in value,
quality, or low cost?
 Are you distributing your product wholesale or retail? Your method of product distribution
can impact the pricing objectives and strategies you are able to use. Direct marketing gives you

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 more control than wholesale marketing over how products are grouped, displayed, and priced.
 What is the estimated life cycle of your product/service? With a short estimated life
cycle, it will be necessary to sell greater quantities of product or generate larger profit margins
than with products where the life cycle is longer.
 What is the projected demand for the product? When demand for a product is
expected to be high, you have more flexibility in choosing pricing strategies because customers
are less likely to be concerned with price and packaging since they really want your product. For
example, consider the prices people are willing to pay when new video game consoles debut.
 Are there other entities, such as the government, that may dictate the price range for your
product? Some products, such as milk, have government-imposed regulations limiting the price
that can be charged.
 Manufacturing cost
 Market place condition & Competition
 Business and financial goals – Future plans

Setting a product/service price is a process comprising of the following steps:

 Set pricing objectives - for example, profit maximization, revenue maximization, or price
stabilization (status quo)
 Develop marketing strategy - perform market analysis, segmentation, targeting, and
positioning.
 Make marketing mix decisions - define the product, distribution, and promotional
tactics.
 Estimate the demand curve - understand how quantity demanded varies with price.
 Calculate cost - include fixed and variable costs associated with the product.
 Understand environmental factors - evaluate likely competitor actions, understand
legal constraints, etc.
 Determine pricing - using information collected in the above steps, select a pricing
method, develop the pricing structure, and define discounts.

PRICING STRATEGIES
Pricing strategies used in marketing all depend on the product, the target market, the competition, the
product's life cycle and the firm's expectation of expansion and distribution of the product. Pricing
strategy refers to method companies use to price their products or services. A pricing strategy is an
approach or a course of action designed to achieve pricing and marketing objectives. They help
marketers to solve the practical problems of establishing prices. There are 5 main categories:

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 Cost based pricing strategies - Involves adding a shilling amount or percentage to the
cost of the product. It also involves calculations of desired profit margins. These
strategies include:
 Cost plus pricing - It is the process of adding a specified shilling amount or percentage
to the sellers cost to establish the price of a product. It simply involves working out
the average cost per unit produced (total cost divided by output) and then adding a
percentage mark up. This strategy is also known as full cost pricing or absorption
pricing
 Mark-up Pricing - A products price is derived by adding a predetermined percentage
of the cost called mark-up, to the cost of the product. Markup can be stated as
percentage of the cost or as a percentage of the selling price.
 Marginal cost pricing - this is the addition to the total cost for producing one extra
unit of output. Some businesses have very high fixed costs (costs that do not vary with
output) and very low variable costs (costs that do vary with output therefore once
their fixed costs have been recovered, they can sell at any price above the variable
(now the marginal cost) This is because the extra units sold will only add small amount
to their total costs, so the business can still be profitable as along as these costs are
covered.
 Contribution pricing - This is similar to marginal-cost pricing in that it mainly considers
the variable costs of production. Businesses will want to make sure that their variable
costs, such as raw materials, are covered, but also need a contribution towards the
fixed costs of the business, such as rent on the factory. Example the fixed costs for a
product are 400/=.The variable costs are 6/= per unit. 100 units are sold. The business
decides to price the product at 11/= this means 5/= per unit sold will go towards the
fixed costs. The fixed costs of 400/= will be covered by the first 80 units sold. Any
more sold beyond 80, will each add 5/=to profits. If 100 are sold the total profit would
be 20 x 5 = 100/=.

 New product pricing strategies- these are used when launching a new product.
Companies bringing out a new product face the challenge of setting prices for the first time.
They can choose between two broad strategies market-skimming pricing and market-
penetration pricing.
 Price Skimming – this is charging the highest possible price that buyers who most
desire the product will pay. This is most commonly seen with new and innovative
products, such as new mobile phones. The price is set high initially to gain those
customers who will pay almost any price to get their hands on the latest gadget. Once
the business has profited from selling to those customers, it drops the price to tempt
other customers who may have been put off by the high price originally. When Sony

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 introduced the world’s first high definition television (HDTV) to the Japanese market
in 1990, the high-tech sets cost $43,000. These televisions were purchased only by
customers who could afford to pay a high price for the new technology. Sony rapidly
reduced the price over the next several years to attract new buyers. By 1993 a 40
inch HDTV for about $2,000, a price that many customers could afford. An entry level
HDTV set now sells for less than $500 in the United States, and prices continue to fall.
In this way, Sony skimmed the maximum amount of revenue from the various
segments of the market.
 Penetration Pricing - Prices are set below those of competing brands to penetrate a
market and gain a significant market share quickly. For this to work, the firm wishes
to discourage rivals from entering the market; the firm wishes to shorten the initial
period of the product life cycle, in order to enter growth and maturity stages as
quickly as possible; Significant economies of scale and experience effects are
anticipated when high volumes are achieved and The market is known to be price
sensitive. For example, Equity Bank’s no account balance required product. The high
sales volume results in falling costs, allowing the company to cut its price even
further. For example Dell used penetration pricing to enter the personal computer
market, selling high-quality computer products though lower-cost direct channels. Its
sales soared when IBM, Apple and other competitors selling though retail stores could
not match its prices.

 Competition Based Pricing/ Market Based Pricing strategies – these are

pricing strategies that are determined by the marketing environmental factors such as
the demand and supply, competitive rivalry, the number of substitute products,
competitors prices, e.t.c. these include:
 Demand based pricing - When this type of pricing is used, customers pay a higher
price when the demand for the product is strong and a lower price when demand is
weak.
 Competition based pricing/ market stabilization pricing - This is where by the prices
of a firm products are primarily influenced by the competitors’ prices. A firm that
uses this type of pricing may choose to price below competitors’ prices, above
competitors’ prices, or at the same level.
 Price leadershippricing - this exists where a dominant organization in a market sets a
price for its products and its rivals feel compelled to match that price. This may be
because there is one large business in the industry coupled with lots of smaller
competitors with far less market power to set prices. Example - Petrol/gas stations
will often have policies where they agree to match local rivals’ prices. This practice has
brought about claims of illegal agreements by businesses to fix prices at an artificially

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 high level and exploit customers. However, it is very hard to prove that this collusion
has actually occurred.

 Product mix PricingStrategies- The strategy for setting a product’s price is often
changed when the product is part of a product mix. In this case, the firm looks for a set
of prices that maximizes the profits on the total product mix. Pricing is difficult because
the various products have different demand and costs and face different degrees of
competitions. They Include:-
 . Product line pricing - Entails setting the price steps between various products in a
product line based on cost differences between the products, customers’ evaluations of
different features and competitors’ prices. The price steps should take into account cost
differences between the products in the line, customer evaluations of their different features
and competitors’ prices.
 Captive Pricing - Is pricing the basic product in a product line low, while pricing related items
at a higher level. For instance charging a low price for cameras and a higher price for films.
 Premium Pricing - Is pricing the highest-quality or most versatile products higher than
other models in the product line. Examples of products that use this type of pricing are
kitchen appliances, beer, ice-ream ,etc
 By product pricing – this is setting a price for by products in order to make the main product’s
price more competitive. In producing processed meats, petroleum and agricultural
products other products, there are often by-products. If the by-products have no value and
getting rid of them is costly, this will affect the pricing of the main product. Using by-product
pricing, the manufacturer will seek a market for these by-products and should accept any
price that covers more than the cost of storing and delivering them. Sometimes the by-
products can even turn out to be profitable.
 Product bundle pricing – this entails combining several products and offering the bundle at a
reduced price. Using product bundle pricing, sellers often combine several others products
and often the bundle at a reduced price. For example Galittos and Chicken inn bundle
chicken, fries and a drink at a combo price Air Arabia operating in Kenya are known to offer
vacation prices that include airfares, accommodation, meals and entertainment. Zuku are
offering cable service, phone service and high speed internet connections at a low combined
price.

 Promotional pricing strategies – these are also referred to as price adjustment

strategies. Companies usually adjust their basic prices to account for various customer
differences, changing situations as well as to increase sales of a product. It is important to note
that promotional pricing strategies are employed along other strategies and they run for a
limited period of time. These include:
 Loss leader pricing – Here supermarkets or department stores drop the price on well known
brands to stimulate additional store traffic. But manufacturers typically disapprove of their

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 brands being used as loss leaders because this practice can dilute the brand image as well as
cause complaints from other retailers who charge the list (normal) price.
 Special event pricing – Sellers will establish special prices in certain seasons to draw in more
customers.
 Cash rebates – Consumers are offered cash rebates to encourage their purchase of the
manufacturer product within a specified time period (e.g. bata)
 Low interest financing – Instead of decreasing its product price, the company can offer
customers low interest financing e.g. auto-makers can announce 3% financing to attract
customers.
 Longer payment terms- Sellers especially mortgage banks and auto companies stretch their
loans over longer periods and thus lower monthly payments
 Warranties and services contracts – The company promote sales by adding a free warranty
offer or service contract.
 Psychological pricing – where the price is set in order to attract the mind of the customer,
for example, ensuring that the prices are odd numbers, for example Kshs 379, or setting a
price that make the customer judge it as a low, e.g. Kshs 999.
 Psychological discounting – This strategy involves putting an artificially high price on a
product and then offering it at substantial savings e.g. was Kshs.359 and now Kshs.299.
 Discriminatory pricing strategies - this occurs when a Company sells a product or service at two
or more prices that do not reflect a proportional difference in cost. They include:
 Customer segment pricing- Different customer groups are charged different prices for the
same product or service e.g. museums often charge a lower admission fee to students.
 Time pricing – Prices are varied by season, month, day or hour.
 Product form pricing – Different versions of the product are priced differently but not
proportionately to their respective costs.
 Image pricing – Different versions of the product are priced at 2 different levels based on
image differences e.g. perfume manufacturers.
 Location pricing – The same product is priced differently at different locations even though
the cost of offering at each location is the same e.g. seat prices in a theatre.

 Differential Pricing – this is charging different prices to different buyers for the same quality
and quantity of product. It can occur in several ways including the following:
 Negotiated pricing - Occurs when the final price is established through bargaining between
the seller and the customer. For instance prices for cars, houses and used equipment.
 Secondary – market pricing - It means setting one price for the primary marketing and a
different price for another market when the price charge in the secondary market is
lower.e.g purchasing a product during off peak times.
 Periodic Discounting - Is the temporary reduction of prices on a patterned or systematic
basis, for example seasonal sales offered by retail shops.
 Random Discounting - Is the temporary reduction of prices on an unsystematic basis. This is
usually done to attract new customers.

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TOPICE EIGHT

DISTRIBUTION DECISION
MARKET COVERAGE/DISTRIBUTION CHANNELS
Distribution is more than supply and demand; it's about timing and ensuring that you have the proper
resources to efficiently get your product/service to your consumer. It's also about satisfying your
customer's needs and wants according to their schedule. It is ensuring the customers have the right
product, at the right time, in the right place in the right format. Distribution ensures accessibility of the
product and services to the customers for satisfaction of needs and wants. In making distribution
decisions you have to decide on the number of outlets and where they will be located, the type of
channels to use, how to manage them as well as logistics management.

Market coverage is the number of active retail and/or wholesale outlets (relative to a saturation level)
that sell a specific firm's brands in a given market. It refers to a strategy that is followed by a company
with regard to covering its target market with the distribution network. There may be different levels of
intensity and coverage through distribution in the different sales territories in the market. While
selecting channels of distribution the marketer must decide about the number of customers it wishes to
reach and the intensity of distribution, and then has to employ one of the three different distribution
strategies:

• Intensive distribution – this means mass distribution in all outlets. For many products, total
sales are directly linked to the number of outlets used (e.g. cigarettes, candy, battery cells,
bread, biscuits, etc.). Products which are of mass use like bread, salt, etc. or relate to impulse
purchase such as chocolates or too small and simple, marketers go for intensive distribution. In
these cases the customer loyalty is found to be low. Customers can buy any brand if their choice
brand is not available.
• Selective distribution - this means carefully chosen distributors e.g. speciality goods such as car
garage. An advantage of this approach is that the producer can choose the most appropriate or
best-performing outlets and focus effort (e.g. training) on them. Selective distribution works
best when consumers are prepared to “shop around”- in other words – they have a preference
for a particular brand or price and will search out the outlets that supply.
• Exclusive distribution - Only specially selected resellers or authorized dealers (typically only one
per geographical area) are allowed to sell the ‘product’. Exclusivity is a strategy often used to
establish a particular image of a product or brand. Using a limited number of distribution
channel partners helps to create an image of exclusivity. It’s also a measure of quality control by
using only distributors who specialize within that industry. Distribution channel partnerships
require both the manufacturer and the distribution partners to take a larger stake in one
another’s survival. Exclusive distribution: creates high dealer loyalty and considerable sales
support, provides greater control, limits potential sales volume and success of the product is

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 dependent upon the ability of a single intermediary.

MARKETING CHANNELS
A distribution channel is a set of interdependent organizations involved in the process of making a
product or service available for use or consumption by the consumer or business centre. Different
channels are used to sell different types of products namely:

• Consumer Products
• Industrial Products
• Services
Two types of marketing channels exist:

 Direct – use of own company sales representatives and direct mails or the internet.
 Indirect – use of intermediaries/third parties/middle men. These may include:
• retail outlets owned by your company or by an independent merchant or chain
• wholesale outlets of your own or those of independent distributors or brokers
• direct mail via your own catalog or flyers
• telemarketing on your own or through a contract firm
• cyber marketing, surfing the newest frontiers
• Agent (who acts on behalf of the producer)
Reasons in favour of direct distribution

An organization may prefer to use direct distribution channel against indirect for the following reasons:

• When it is a technical product requiring demonstrations

• Lethargic intermediaries i.e. wholesalers and retailers will try to sell all the products they handle
and will not favour one manufacturer products.
• When no intermediaries exist to sell the product.
• A small target market
• When they want to control the price
• Establish lasting relationship with the customers
Reasons in favour of indirect distribution

An organization may prefer to use indirect distribution channel against direct for the following reasons:

• When it is considered to be Cheaper

• Financial resources can be more profitably employed elsewhere
• A lack of retailing expertise
• A lack of sufficient/wide assortment of products to sell
• When the market is big and geographically distributed
• When there is no other way of reaching the consumers

FUNCTIONS OF MARKETING CHANNELS

Marketing channels performs the following functions:

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 • Information: The collection and dissemination of marketing research information about potential
and current customer, competitors and other forces in the marketing environment.
• Promotion: The development and dissemination of persuasive communication about the
company offers in order to attract customers.
• Negotiation: The attempt to reach final agreements on price and other terms so that transfer of
ownership or possession can be effected.
• Ordering: The backward communication of intention to buy by the marketing channel members
to the manufacturer.
• Financing: The acquisition and allocation of funds required to finance inventories at different
levels of the marketing channels
• Risk taking: The assumption of risk connected with carrying out the channel work.
• Physical possession: The successive storage and movement of physical products from producer
to the final customers.
Selection of a particular market channel is determined by the objectives and the services provided by
each.

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MARKETING CHANNEL DESIGN DECISIONS
To ensure customers have accessibility to the product, the company has to ensure that they design the
channels appropriately and make appropriate decision on whom to use and why they are preferred.

The channel design decisions requires a company to determine the actual design, define the objectives
to be achieved using the channels designed and constraints that are likely to be faced in the
implementation and identifying and evaluating the major channel alternatives. The designing of a
manufacturer’s channel system varies depending on the environmental conditions existing in market
which can be opportunities or threats. However, for appropriate channel design organizations need to
have a clear understanding of the service output levels that consumers desire, so that when the channel
choice is made it delivers the same if not more. Marketing channel design decisions covers the following
elements:

• Analyzing service output levels desired by customers – this focuses on what customers are looking
for, including:
– Lot size/bulk breaking
– Waiting and delivery time
– Spatial convenience
– Product variety or assortment
– Service back-up
• Establishing channel objectives and constraints such as
– Increase the availability of the good or service to potential customers.
– Satisfy customer requirements by providing high levels of service.
– Ensure promotional effort.
– Obtain timely and detailed market information.
– Increase cost- effectiveness.
– Maintain flexibility.
• Identifying and evaluating the major channel alternatives - This covers three elements
– Type of intermediary – the company should identify if intermediaries are to be use or not. If
so, which ones are available to carry out the marketing flows? It is important for the
company to seek innovative marketing channels.
– The number of intermediaries to be used at each channel level – this is determined by the
intensity of market coverage desired by the company. It can be selective, intensive or
exclusive.
– Terms and responsibilities of each channel member – it is important to clearly define what
each player in the channel will be doing. It also covers the policies that will govern the
relationship between the producer and the intermediaries chosen.
• Evaluating the major channel alternatives - The firm must evaluate each alternative against
– Economic criteria. Each channel alternative will produce a different level of sales and

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 costs. It is important to determine the sales levels that would be produced by a
company sales force compared to a sales agency and the costs of selling different
volumes through each channel.
– Control criteria. Next, evaluation must be broadened to consider control issues with the
two channels. Using a sales agency poses more of a control problem.
– Adaptive criteria. Each channel involves some long-term commitment and loss of
flexibility. A company using a sales agency may have to offer a five-year contract.

CHANNEL MANAGEMENT
Channel management is a technique for selecting the most efficient channels or routes to market for
your products and services, and deriving the best results from those channels by applying appropriate
financial, marketing or training resources. It covers the following aspect:

 Selecting and recruiting channel member - The recruitment process, screening involves elimination
of applicants who do not match the criteria set for the position. This would include the following
steps:
• Identify and document your needs
• Identify selection criteria
• Select channel partners
• Use selection criteria to make a decision
 Motivating channel members – this involves giving the dealers a reason to carry your product. This
can be achieved through two main strategies, that is pull and push strategies.
• Pull strategy: motivates the end user to approach your channel of distribution and "call out" for
your value offer . . . Pull strategy examples are
o Media releases
o Rebate programs
o Exhibitions
o Direct mail campaigns
o End user seminars
o Telemarketing efforts
• Push strategy these types of promotions push your value offer through the channel. Push
strategy examples are:
o Travel incentive programs
o Merchandise programs
o Training programs
o Monetary SPIFFS (special promotional incentive factory funds
o Special discounts or allowances
 Evaluating channel members – this includes measuring and monitoring to ascertain the level of
performance of the companies channel members of the company. The scope and the frequency
of evaluation is determined by:
o Degree of the manufacturer’s control over channel members
o Relative importance of channel members

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 o Nature of the product
o Number of channel members
It covers the following:

• Developing criteria for measuring channel member performance: these can include;
– Sales performance of channel members
– Inventory maintenance of channel members
– Selling capabilities of channel members
– Attitudes of channel members
– Competition faced by channel members
– General growth prospects of channel members

• Periodically evaluating the channel members’ performance against the criteria

• Recommending corrective actions to reduce the number of inadequate performances
• Modifying channel arrangements

PHYSICAL DISTRIBUTION OR LOGISTICS MANAGEMENT

 Logistic management is the process of planning, implementing & controlling the effective and
efficient flow of goods or services from the point of origin to the point of consumption. Logistics
management helps companies reduce expenses and enhance customer service. Logistics is the
management of the flow of goods or services between the point of origin and the point
of consumption in order to meet the requirements of customers or corporations.
 Logistics addresses not only the problem of outbound distribution (moving products from the
factory to customers) but also the problem of inbound distribution (moving products and
materials from suppliers to the producer).
 It involves the management of entire supply chains, value-added flows from suppliers to final
users. Thus, the logistics manager's task is to coordinate activities of suppliers, purchasing agents,
marketers, channel members, and customers. These activities include forecasting, information
systems, purchasing, production planning, order processing, inventory, warehousing, and
transportation planning.

The key logistic functions in a supply chain include:

Transportation: Marketers need to take an interest in their company's transportation decisions. The
choice of transportation carriers affects the pricing of products, delivery performance, and condition of
the goods when they arrive—all of which will affect customer satisfaction. In shipping goods to its

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warehouses, dealers, and customers, the company can choose among five transportation modes: rail,
truck, water, pipeline, and air.

Warehousing: Every company must store its goods while they wait to be sold. A storage function is
needed because production and consumption cycles rarely match. A company must decide on how
many and what types of warehouses it needs and where they will be located. The company might use
either storage warehouses: Storage warehouses store goods for moderate to long periods or
Distribution centers are designed to move goods rather than just store them. They are large and highly
automated warehouses designed to receive goods from various plants and suppliers, take orders, fill
them efficiently, and deliver goods to customers as quickly as possible.

Inventory control:Inventory levels also affect customer satisfaction. The major problem is to maintain
the delicate balance between carrying too much inventory and carrying too little. Carrying too much
inventory results in higher-than-necessary inventory-carrying costs and stock obsolescence. Carrying too
little may result in stock outs, costly emergency shipments or production, and customer dissatisfaction.
In making inventory decisions, management must balance the costs of carrying larger inventories
against resulting sales and profits. During the past decade, many companies have greatly reduced their
inventories and related coststhrough just-in-time logistics systems. Through such systems, producers
and retailers carry onlysmall inventories of parts or merchandise, often only enough for a few days of
operations. Newstock arrives exactly when needed, rather than being stored in inventory until being
used. Just-in time systems require accurate forecasting along with fast, frequent, and flexible delivery so
thatnew supplies will be available when needed.

Order Processing: The small business owner is concerned with order processing—another physical
distribution function — because it directly affects the ability to meet the customer service standards
defined by the owner. If the order processing system is efficient, the owner can avoid the costs of
premium transportation or high inventory levels. Order processing varies by industry, but often consists
of four major activities: a credit check; recording of the sale, such as crediting a sales representative's
commission account; making the appropriate accounting entries; and locating the item, shipping, and
adjusting inventory records.

Technological innovations, such as increased use of the Universal Product Code, are contributing to
greater efficiency in order processing. Bar code systems give small businesses the ability to route
customer orders efficiently and reduce the need for manual handling. The coded information includes all
the data necessary to generate customer invoices, thus eliminating the need for repeated keypunching.

Another technological innovation affecting order processing is Electronic Data Interchange. EDI allows
computers at two different locations to exchange business documents in machine-readable format,

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employing strictly-defined industry standards. Purchase orders, invoices, remittance slips, and the like
are exchanged electronically, thereby eliminating duplication of data entry, dramatic reductions in data
entry errors, and increased speed in procurement cycles.

Protective packaging and materials handling: Another important component of a small business
physical distribution system is material handling. This comprises all of the activities associated with
moving products within a production facility, warehouse, and transportation terminals. One important
innovation is known as unitizing—combining as many packages as possible into one load, preferably on
a pallet. Unitizing is accomplished with steel bands or shrink wrapping to hold the unit in place.
Advantages of this material handling methodology include reduced labor, rapid movement, and
minimized damage and pilferage.

A second innovation is containerization—the combining of several unitized loads into one box.
Containers that are presented in this manner are often unloaded in fewer than 24 hours, whereas the
task could otherwise take days or weeks. This speed allows small export businesses adequate delivery
schedules in competitive international markets. In-transit damage is also reduced because individual
packages are not handled en route to the purchaser.

Customer service: Customer service is a precisely-defined standard of customer satisfaction which a

business intends to provide for its customers. In today's fast-paced, technologically advanced business
environment, such systems often involve the use of specialized software that allows the owner to track
inventory while simultaneously analyzing all the routes and transportation modes available to
determine the fastest, most cost-effective way to deliver goods on time.

Integrated Logistics Management

Today, more and more companies are adopting the concept of integrated logistics management. This
concept recognizes that providing better customer service and trimming distribution costs requires
teamwork, both inside the company and among all the marketing channel organizations. Inside, the
company's various functional departments must work closely together to maximize the company's own
logistics performance. Outside, the company must integrate its logistics system with those of its
suppliers and customers to maximize the performance of the entire distribution system.

Cross-Functional Teamwork Inside the Company - In most companies, responsibility for various logistics
activities is assigned to many different functional units—marketing, sales, finance, manufacturing,

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purchasing. Too often, each function tries to optimize its own logistics performance without regard for
the activities of the other functions. However, transportation, inventory, warehousing, and order-
processing activities interact, often in an inverse way. For example, lower inventory levels reduce
inventory-carrying costs. But they may also reduce customer service and increase costs from stock outs,
back orders, special production runs, and costly fast-freight shipments. Because distribution activities
involve strong trade-offs, decisions by different functions must be coordinated to achieve superior
overall logistics performance. The goal of integrated logistics management is to harmonize all of the
company's distribution decisions. Close working relationships among functions can be achieved in
several ways. Some companies have created permanent logistics committees made up of managers
responsible for different physical distribution activities. Companies can also create management
positions that link the logistics activities of functional areas. Many companies have a vice president of
logistics with cross-functional authority. The important thing is that the company coordinate its logistics
and marketing activities to create high market satisfaction at a reasonable cost.

Building Channel Partnerships - The members of a distribution channel are linked closely in delivering
customer satisfaction and value. One company's distribution system is another company's supply
system. The success of each channel member depends on the performance of the entire supply chain.
Companies must do more than improve their own logistics. They must also work with other channel
members to improve whole-channel distribution. Today, smart companies are coordinating their
logistics strategies and building strong partnerships with suppliers and customers to improve customer
service and reduce channel costs. These channel partnerships can take many forms. Many companies
have created cross-functional, cross-company teams.

Other companies partner through shared projects. For example, many larger retailers are working
closely with suppliers on in-store programs. Channel partnerships may also take the form of information
sharing and continuous inventory replenishment systems. Companies manage their supply chains
through information. Suppliers link up with customers to share information and coordinate their
logistics decisions. Here are just two examples: Today, as a result of such partnerships, many companies
have switched from anticipatory-based distribution systems to response-based distribution systems. In
anticipatory distribution, the company produces the amount of goods called for by a sales forecast. It
builds and holds stock at various supply points, such as the plant, distribution centers, and retail outlets.
A response-based distribution system, in contrast, is customer triggered. The producer continuously
builds and replaces stock as orders arrive. It produces what is currently selling.

Third-Party Logistics - Third-party logistics providers are firms that perform most or all of the logistics
functions that manufacturers, suppliers, and distributors would normally perform themselves. Today, 77
percent of manufacturers listed in the Fortune 500 outsource one or more logistics functions, at least on
a limited basis. Ryder Systems, UPS Supply Chain Solutions, FedEx Supply Chain Services, DHL, and
Penske Logistics are just a few of the companies that specialize in handling logistics functions for their
clients. Companies may use third-party logistics providers for several reasons:

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First, because getting the product to market is their main focus, these providers can often do it more
efficiently and at lower cost than clients whose strengths lie elsewhere. According to one study,
outsourcing warehousing alone typically results in 10 percent to 15 percent cost savings. Another expert
estimates that companies can save 15 percent to 25 percent in their total logistics costs by outsourcing.

Second, outsourcing logistics frees a company to focus more intensely on its core business.

Finally, integrated logistics companies understand increasingly complex logistics environments. This can
be especially helpful to companies attempting to expand their global market coverage.

TOPICE NINE

PROMOTION DECISIONS
PROMOTIONAL OBJECTIVES
Promotion represents the various aspects of communication of marketing information about the
product or service with the goal of generating a positive customer response. It is any form of
communication carried out by the organization to create awareness, remind, encourage, create a
positive image, to position and persuade customers about a company’s products, services and the
company itself. Consequently, promotion decisions should be made with an appreciation for how it
affects other areas of the company. In addition to coordinating general promotion decisions with other
business areas, individual promotions must also work together. Promotion decisions are guided by
promotional objectives which include:

• Build Awareness – New products and new companies are often unknown to a market, which
means initial promotional efforts must focus on establishing an identity. In this situation the
marketer must focus promotion to: 1) effectively reach customers, and 2) tell the market who
they are and what they have to offer.
• Create Interest – Moving a customer from awareness of a product to making a purchase can
present a significant challenge. The focus is on creating messages that convince customers that
a need exists has been the hallmark of marketing for a long time with promotional appeals
targeted at basic human characteristics such as emotions, fears, sex, and humor.
• Stimulate Demand – The right promotion can drive customers to make a purchase.
In the case of products that a customer has not previously purchased or has not purchased in a
long time, the promotional efforts may be directed at getting the customer to try the product.
For products with an established customer-base, promotion can encourage customers to
increase their purchasing by providing a reason to purchase products sooner or purchase in
greater quantities than they normally do.

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 • Provide Information – Some promotion is designed to assist customers in the search stage of
the purchasing process. In some cases, such as when a product is so novel it creates a new
category of product and has few competitors, the information is simply intended to explain
what the product is and may not mention any competitors. In other situations, where the
product competes in an existing market, informational promotion may be used to help with a
product positioning strategy.
• Reinforce the Brand – Once a purchase is made, a marketer can use promotion to help build a
strong relationship that can lead to the purchaser becoming a loyal customer. For instance,
many retail stores now ask for a customer’s email address so that follow-up emails containing
additional product information or even an incentive to purchase other products from the
retailer can be sent in order to strengthen the customer-marketer relationship.

PROMOTIONAL MIX
This focuses on the tools, techniques and methods that an organization can use to achieve marketing
objectives. The choice of the promotional mix is determined by the target audience, the promotion
objective, the cost, media availability, government policies and the product/service that are to be
communicated. Promotional mix includes:

 Advertising - Any paid form of non-personal communication of ideas or products in the "prime
media": i.e. television, newspapers, magazines, billboard posters, radio, cinema etc. Advertising is
intended to persuade and to inform. The two basic aspects of advertising are the message (what
you want your communication to say) and the medium (how you get your message across).
 Personal selling - This is a process by which a person persuades the buyer to accept a product or a
point of view or convince the buyer to take specific course of action through face to face contact. It
is an act of helping and persuading through the use of oral presentation of products or services. The
personal selling may focus initially on developing a relationship with the potential buyer, but will
always ultimately end with an attempt to "close the sale".
 Sales promotion - is any activity that offers an incentive for a limited period to obtain a desired
response from the target audience or intermediaries which includes wholesalers and retailers. It
stimulates consumer demand, market demand and improve product availability. Examples:
Contests, product samples, Coupons, sweepstakes, rebates, tie-ins, self-liquidating premiums, trade
shows, trade-ins, and exhibitions.
 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 favorable presentation of it
on radio, television or stage. Non-personal stimulation of demand for a product, service or business
unit by generating commercially significant news about it in published media or obtaining favorable
presentation of it on radio, television or stage
 Corporate communications/public relations – this is the deliberate, planned and sustained effort to
establish and maintain mutual understanding between an organization and its public.
 Exhibitions: Exhibitions provide a chance to try the product by the customers. It is an avenue for the
producers to get an instant response from the potential consumers of the products.

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 Direct Marketing is reaching the customer without using the traditional channels of advertising such
as radio, newspaper, television etc. This type of marketing reaches the targeted consumers
with techniques such as promotional letters, street advertising, catalogue distribution, fliers etc.
 Packaging - this involves the development of a container and a graphic design for a product.
Packaging communicates to the person buying it right up until they make the decision to plunk
down their money and take it home. If it's sitting on a shelf with eight similar products, it can't just
look nice, it has to scream its message out in order to get noticed. Your packaging should be
noticeable within three seconds in a store-shelf situation.
 Branding - A brand is an identifying name term, design or symbol or any other feature that identifies
one sellers goods or services as a distinct from those of others. A brand name is the part of a brand
that can be spoken-including letters, words and numbers.
 Online tools – such as websites, social media including face book, linked in, chats, blogs, twitter,
other online aspects such as e-commerce activities, celebrity online branding.

DEVELOPING PROMOTIONAL STRATEGIES

To develop winning promotional strategies:

– Relentlessly promote competitive advantage

– Focus on keeping customers first and attracting new ones
– Personalise, Personalise, personalise!
– Seek to be different, creative and unconventional
The following steps are included in developing promotional strategies :

• Think about your target audience.

• Take a survey of all the possible combinations of products and services you can offer to people.
• figuring out how and when to run your promotion.
Promotion strategies include:

 Online promotion strategies - With this type of strategy, you can reach a massive audience or
focus in on a specific group of people to market to. You could choose to display advertising on
related websites or send out emails to market to your target market. You might even consider
using pay-per-click marketing, which is a strategy that allows you to pay only when someone
clicks on an ad and visits your website.
 Traditional media - For example, you could set up an ad campaign that revolves around TV or
radio advertising. Using print media is another way that you can reach a large audience. If you
integrate your marketing into different mediums, it is important to make sure that your
message is consistent across all of them. This way, you will repeat your message and create
brand awareness moving forward.
 Push promotion strategy - With this type of strategy, you aim to push your products out into
the marketplace through promotions and sales. You have to use a talented sales force to show
your products to customers and then sell the product. This type of marketing is generally used
for products that people do not know about but could have some use for if they were to
become aware of them.

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  Pull promotional strategy - With this type of promotional strategy, you try to generate interest
in your products. With this strategy, you will create enough interest that consumers will ask
specifically for your products in stores. When this happens, you can create word-of-mouth
advertising for your products. With this strategy, it might take a large budget for marketing to
get the process started. Then, once you get a reputation developed, you can generally bring in
regular sales without spending as much on advertising.
 Integrated marketing communications strategy.

INTEGRATED MARKETING COMMUNICATIONS STRATEGY

Integrated marketing communications strategy is a management concept that is designed to make all
aspects of marketing communication such as advertising, sales promotion, public relations, and direct
marketing work together as a unified force, rather than permitting each to work in isolation. All of
these communications tools work better if they work together in harmony rather than in isolation. Their
sum is greater than their parts - providing they speak consistently with one voice all the time, every
time.

Integrated marketing communications strategy takes advantage of a combination of communication

tools and media to spread a message. By combining various tools, marketers are able to ensure that
their audience is reached and can leverage the various tools in ways that are most effective. Integrated
marketing draws upon the power of traditional advertising and public relations efforts, as well as the use
of new, online communication tools that include social media.

An integrated marketing communication plan is an inside-out method that aims to unify your brand's
message across all communication channels and departments. In ensuring that your departments are
working in concert, you can present your customers with a consistent brand and a more powerful
message. These strategies include:

 Consistent Messaging: One of the most important strategies of integrated marketing

communication is consistent messaging. As you develop a marketing message, create a basic script
that can be used by anyone in your company. Train every member of your staff, from the janitor to
the Chief Executive Officer, in the established company message so that they can tailor it to the
individual situation. Work it into your website copy, brochures, advertisements, public relations
statements, sales pitches and company meetings. By presenting a united front to your audience, you
can ensure that customers will hear a similar message from all points of entry. For example, when

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 Kenyatta University launched the Digital School, you will find the consistency of the message online,
on banners, in the newspapers and social sites. The message here is “Digitize Masomo the
Anywhere School”.
 Internal Integration: To ensure that your marketing is helping all parts of your company, work on
internal integration. Start a program that encourages data sharing across all departments so that
everyone is working with the same information. When your staff knows about projects and
initiatives in other departments, they can help suggest refinements and use the information as part
of their own marketing efforts. With an overview of the company's internal workings, you can better
create campaigns that support departmental and company-wide initiatives by adjusting scheduling,
writing new copy or pushing different products or features. Examples are the Mobile phone
operators where all their staff are required to subscribe to the Mobile Operator’s services. This will
make them own the system.
 Relationship Building: Integrated marketing communication relies on strong relationships with
customers, and adjusts strategies based on their needs. By seeing customers as people and building
relationships that allow them to provide feedback; you can help your brand react to changes in the
market. As part of your marketing program, work in time to talk directly to your customers. When
you take their advice, follow up on questions, and implement the changes they need, you can
strengthen the relationship and reinforce the quality of your brand. An example is the Safaricom
Customer Care where calls are recorded and analyzed to determine any recurrent trends which will
be forwarded to be analyzed so as to prevent recurrence of the problem thereby improving on
quality.
 Build Brand: A strong brand can be a powerful marketing tool, and part of integrated marketing
communication involves creating a consistent, unified brand identity. Work with each part of your
company to build a brand that lets customers know who you are. Across each part of your company,
from the physical office space to the website, ensure consistency of colours, visual elements,
photography style, fonts, and representative imagery. Each thing that a customer interacts with,
from a business card to a delivery truck sighting, should look and feel the same. In doing so, you can
create name recognition and an immediately identifiable brand. An example is Safaricom which has
been able to carry out countrywide branding making its customers associate the Green colour with
the Company.

Components of IMC

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Integrated Marketing Communication weaves diverse aspects of business and marketing together.
These include:

• Organizational culture

 The organization's vision and mission

 Attitudes and behaviors of employees & partners
 Communication within the company
e. g. the uniform of Safaricom employees is green across the country thereby making the
employees relate with the organization.

• Four P's

 Price, pricing plans, bundled offerings

 Product (product design, accessibility, usability)
 Promotion
 Place (point of purchase, in-store/shopper experience)
 Processes
 Physical evidence
 People

E.g. Standardized rates in Safaricom services, Lower calling rates, wide variety of products M-
Pesa and easy accessibility of Safaricom services has enabled Safaricom to position itself as the
leading Mobile Company and most profitable Companies in East and Central Africa.

 Promotional mix
 Advertising - This includes:
 Broadcasting/mass advertising: broadcasts, print, internet advertising,
radio, television commercials
 Outdoor advertising: billboards, street furniture, stadiums, rest areas,
subway advertising, taxis, transit
 Online advertising: mobile advertising, email ads, banner ads, search
engine result pages, blogs, newsletters, online classified ads, media ads

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 Direct marketing - This includes direct mail, telemarketing, catalogues, internet

sales, text messaging, websites, online display ads, fliers, catalogues distribution,
promotional letters, outdoor advertising, telemarketing and coupons. Safaricom has
been able to market its new products using this method where they send its
customers messages of new products and also use coupons and outdoor advertising
to advertise its new products.
 Online marketing - Social Media such as Facebook, Twitter and YouTube. Safaricom

has a strong online presence and an instance is YouTube where a Safaricom

advertisement is played before the actual video.

 Sales and customer service - Sales materials such as brochures and presentations

and efficient customer service. Safaricom has been able to leverage their Customer
Service to be able to retain their customers and have a competitive advantage of
their competitors.

 Public Relations - Public relations includes carrying out special events, interviews,

conference speeches, industry awards, press conferences, testimonials, news

releases, publicity stunts, community involvement and charity involvement.
Safaricom recently sponsored the Groove Awards which was meant to recognize the
leading gospel artistes in the region.

 Sales Promotions - This refers to contests, coupons, product samples, prizes, rebates

and special events. Safaricom has been able to have a number of promotions such
as “BonyezaUshinde” where they gave their customers an opportunity to win money
through usage of their services.

 Trade shows - This includes product demonstrations such as Safaricom Open Day

where they display their various products to the Customers.

 Corporate philanthropy - This includes donations, volunteering and charitable

actions. An example is Safaricom Foundation and Bring Zack Home which was for
the construction of the spinal cord hospital
 Participation of all within the organization – this can be achieved through internal
marketing.

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When these diverse aspects of business and marketing are weaved together properly an effective
campaign can be achieved. Effective campaigns are demonstrated on the Integrated Brands showcase
which recognizes brands that are innovative, strategic and successfully growing their sales. By effectively
leveraging each communication channel greater impact can be achieved together than achieved
individually. This will eventually lead to the attainment of the organization's goals and objectives.

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