DEMAND IN MARKETING Marketing experts categories demand as explained below and use the various understanding of it to plan, implement

and control marketing strategies. 1. Negative Demand: This is the total dislike for a product Marketing Challenge Change peoples belief and attitude in the process referred to as Conversional Marketing e.g. Nissan In the Kenyan Market 2. No Demand: People are not interested or are indifferent about the product for example Insurance in Kenya. 1. Challenge Create Interest in the product by appealing to emotional sense 3. Latent Demand: Untapped demand and strong desire for nonexisting products 2. Challenge Innovate and introduce new products and e.g. MPesa, Mobile telecommunication and credit cards. 4. Falling Demand: to low. This is a case whereby demand falls from high

Challenge Remarket and redesign name and structure of the product 5. Irregular Demand: Seasonal i.e. Low and High season, e.g. sale of Umbrellas in Europe in summer and winter: Peak times and nonpeak times Challenge Provide incentives for use during the low seasons 6. Full Demand: This is demand at its optimum Challenge Continue market and product research to allow for the continuity of full demand.

7. Overfull Demand: This is demand for a product at the rate that surpasses production. It may be permanent or temporary. Challenge If temporary, create more to accommodate the requirement. If permanent, use high price cautiously to control this demand or engage in demarketing 2.

MARKETING ENVIRONMENT A companys marketing environment consists of factors and forces that may affect marketing managements ability to built and maintain successful relationship with customers. The marketing environment offers both opportunities and threats. Successful companies are those that adapt to the environmental changes quickly and turn the threats to opportunities of growth. Marketers understand their environments by conducting environmental scanning. Environmental scanning is the practice of keeping track of external changes that can affect markets including the demand for goods and services of an organization. The marketing environment has two broad dimensions: (a) (b) Microenvironment Microenvironment

THE MICRO MARKETING ENVIRONMENT These are factors very close to the company that affects its abilities to service its customers. The internal forces include; the company, supplier, customer markets, publics and marketing intermediaries. 1. The Company The marketing manager is influenced by the other company departments; hence he/she must work closely with them.

Top management for instance sets the companys mission, objectives, broad strategies and policies the marketing and finance departments sources for funds to carry out the marketing plan. The R&D department focuses on designing products that are attractive and satisfy customer needs. Purchasing department worries about getting quality material input, while production department produces the desired product. All these departments interdependent on each other

and impact on the marketing departments plans and actions. 2. The Suppliers Suppliers provide the resources needed by the company to produce its goods and services. Marketing managers must watch supply availability to avoid deficiency of the product in the market. Marketers should monitor price trends of their key inputs e.g. petroleum products, rubber, etc. rising supply costs translates to increased production cost which forces selling price to go up. 3. Customer Markets A customer is one who buys a companys final product in exchange for a monetary value. Marketers must understand the types of customer markets and where possible use price discrimination on these markets. explained below: (a) (b) Consumer markets Consist of individuals and firms that buy goods and services for final consumption. Industrial markets Buys goods and services for further processing or for use in their production process. Five types of markets are

(c) (d)

Resellers markets Buys goods and services to resell at a profit. Government markets Made up of government agencies that buy goods and services to produce public goods or services.

(e)

International markets Consist of buyers in other countries including consumers, producers, resellers and governments.

4.

Publics Publics are groups that have an actual or potential interest in an organizations ability to achieve its marketing objectives. They include: (a) Financial Publics They influence the ability of a firm to obtain funds for conducting its marketing programs. They include banks, investment houses and stockholders. (b) Media publics Include newspapers, magazines, radio and television stations that carry news, features and editorial opinion. The marketer must know how to interact with the media for regular coverage of the organization. (c) Government publics Marketers must always consult the company (d) lawyers on issues of product safety, advertisement etc. Citizen action publics A companys public relations sector must stay in term with consumers and consumer action groups and attend to their concerns. (e) Internal publics Includes workers, management, volunteers, board of director etc. motivate their internal publics. Companies must

It motivates marketing

force strive hard to attaining the set goals and this spills over to external publics. 5. Marketing Intermediaries These are forces that can help the company promote, sell and distribute its products to the final buyer. They include resellers, physical distribution firms and marketing service agencies. (a) Resellers Are distribution channel firms that help the company find customers e.g. wholesalers, distributors, retailers (Nakumatt, Uchumi, Tuskys). These organizations often have enough monopsony power to dictate terms or even shut the manufacturer out of large markets. (b) Physical distribution firms (transporters) Are firms that help the company move its goods from the point of manufacturer to the final consumers. The marketer must balance factors like costs, delivery time and safety. (c) Marketing service agencies Are research firms (Steadman Group), advertising agencies, (Adopt A Light, Eagles Outdoor, Monier Outdoor), media houses (Nation, Standard, Royal Media, KBC) and marketing consultants. Such firms help the company promote and target its products to the right markets. The marketer must consider price, service quality, target market etc. before choosing a marketing agency. MACRO MARKETING ENVIRONMENT Macro marketing environmental are factors that are outside the companys control and often pose threats or provide opportunities to

the company.

The external forces are often discussed under the

PLEST or PEST frame work as follows: 1. 2. 3. 4. 5. 1. Political Legal environment Economic environment Social environment (demographic environment) Technological environment Political and Legal factors These comprises of laws, regulations, government agencies and social pressure groups that include and limit various organizational marketing effort. Every marketing activity is subject to a wide range of laws and regulations. These legislations have been enacted for the following reasons: (a) (b) To protect companies from each other e.g. patent rights. To protect consumers from unfair business practices e.g. labels on cigarettes smoking kills , dont drink and drive (c) To protect consumers from overpricing e.g. laws requiring banks to charge up to a given interest rate. 2. Marketers need to know the major laws protecting consumers, society and competition. Economic Environment These are factors that affect consumer buying power and spending pattern.

Marketers must understand economic trends. are high.

During

periods of boom (prosperity), production and employment Consumers demand more goods and services. of inflation, prices rise faster than They spend freely on basic and luxury goods. During periods production of goods. Consumers income is not sufficient to sustain them hence low demand for goods/services During periods of recession, production and employment decreases, this is followed by reduced consumption of luxury goods as people stick to the basic needs only. During recovery, production starts to increase, unemployment decreases and consumers start spending more money in their purchases. Hence times marketers of engage boom, in aggressive firms marketing adopt the campaign, during periods of recession and decline and in economic some Demarketing concept. Demarketing is an effort to reduce demand for a product. An increase in government taxes automatically reduces consumers disposable income 3. Demographic Environment Demography is the study of human population in terms of size, density, location, age, gender, race, etc. The (a) (b) growing world population for instance has the following implications to a marketer: A growing population means growing human needs to satisfy. Depending on the populations purchasing power, it may mean growing marketing opportunities.

Marketers therefore have to keep close track of the demographic trends because people make up markets both at home and abroad.

Marketers have to track changes in age, family structures, geographic population shifts, population diversity etc.

4.

Technological Environment Refers to forces that create new technologies, new products and market opportunities e.g. internet, mobile phones, computers, credit cards, television, etc. New technologies create new markets and opportunities. Companies that do not keep up with technological change soon find their products having been rendered obsolete. Through research and development, companies are able to produce practical and affordable versions of products.

5.

The Competitive Environment A firms competitors are those organizations who produce and sell similar or identical products/service to those of the firm. Successful firms are those that provide greater customer value and satisfaction relative to competition. Marketers must gain strategic advantage by positioning their product offerings strongly against competitors offerings. Economists describe three main types of competition: (i) Pure competition Occurs when similar products are offered, there are many buyers and sellers, the sellers can freely enter the market or exit it and both

buyers and sellers have free access to information. Marketers must understand firms under perfect competition take prices as given by the market and that any marketing effort they engage only creates awareness and might not affect the quantity demanded directly e.g. the cooking oil industry in Kenya is made up of Bidco, Unilever, Kapa, Pwani etc. (ii) Monopolistic competition Occurs when there are a few large sellers in the market. No free entry or exit from the market, information does not flow freely and each firm has full control of its demand curve. Firms limit quantity supplied and charge high prices to maximize profits. e.g. Airtel, Safaricom and Telcom. (iii) Oligopoly Occurs where products are similar but differentiated. There are a few sellers and no free flow of information. Firms have full control of their prices such that a price reduction by one firm is quickly followed by competing firms to secure their market share but a price increment by one oligopolist is not necessarily followed by the other firms. e.g. Shell, Kenol Kobil, Total, Caltex, in the oil business in Kenya. Competition largely poses the problem of pricing that the marketer must always try to resolve. The other competitive forces are threat of new entrants, threat of substitute products and bargaining power of suppliers.