MOI UNIVERSITY

SCHOOL OF BUSINESS AND ECONOMICS

BBM 212: PRINCIPLES OF MARKETING: COURSE OUTLINE
INSTRUCTOR: SYLVIA C TALLAM

This course aims at exposing students to the principles and concepts of marketing. It also
provides a basis for the understanding of marketing mix and requisites of a marketing career.
It attempts to provoke creative thinking and also create a desire to participate in the world of
marketing profession. At the end of the course students are expected to have appreciated the
breadth of marketing as a discipline and profession. They should also understand the role
played by marketing function in business organizations. This will enable students to positively
respond to the challenges facing contemporary business organizations through leveraging the
marketing function.

COURSE CONTENT
1. AN OVERVIEW OF MARKETING
1.1 Definitions
1.2 Components of Marketing
1.3 Importance of Marketing
1.4 Marketing Philosophy
1.5 Marketing Environment
2. MARKETING MIX
2.1 Product – product components, new product development, diffusion of innovation
and the PLC
2.2 Price – price setting objectives and methods
2.3 Promotion- Personal selling, public relations& publicity and Advertising (more focus
on advertising- 5Ms)
2.4 Place – types of channels and factors affecting channel choice

3. SERVICE MARKETING
3.1 Unique characteristics of services
3.2 Adaptation of marketing mix (8Ps of service marketing)

4. CONSUMER AND BUYER BEHAVIOUR

4.1 Influences of consumer behavior
4.2 Buying Process
4.3 Industrial Buyer

5. SEGMENTATION, TARGETING AND POSITIONING

5.1 Segmentation concept and criteria
5.2 Bases of segmentation
5.3 Targeting and Positioning

6 MARKETING INFORMATION SYSTEM

6.1 Importance
6.3 Components (Internal records, Marketing intelligence, Marketing research &
Marketing Decision Support Systems)
6.3 Further focus on Marketing Research process

7. GLOBAL MARKETING
7.1 International Marketing Environment
7.2 Factors to consider

8. CONTEMPORARY ISSUES IN MARKETING

Class notes: BBM212 SEPT-DECEMBER 2018.

 8.1 Ethics in Marketing
8.2 E-Marketing

COURSE EVALUATION
CAT 1 - 15%
CAT 2 - 15%
End of Semester Exam - 70%

TOTAL 100%

REFERENCES

1. Kotler, Philip and Armstrong, Gary (2004): Principles of Marketing Prentice-Hall of India
Private Ltd. New Delhi.
2. Thuo, Kuria J (2008): Principles of Marketing: A Skill-Building Approach. ACrodile
Publishing Ltd.Nairobi
3. Kibera, F.N and Waruingi, B.C (1998 Fundamentals of Marketing):: An African
Perspective.Kenya Literature Bureau.Nairobi.

Class notes: BBM212 SEPT-DECEMBER 2018.

 BBM212: PRINCIPLES OF MARKETING NOTES
1. AN OVERVIEW OF MARKETING
The concept of marketing is one that is widely recognized as being central to the success of any
business, irrespective of the size or sector of the economy in which it operates. In the past,
many organizations relied simply on a production-based approach to their businesses and
believed that the ability to mass-produce and competitively price products would be sufficient
to ensure success. The underlying assumption was that consumers would look for products
that are widely available and affordable.

However, the environment that the businesses operate has greatly continued to change.
Organizations are faced with changes in economic conditions, increase in productivity, high
cost of energy, threat of recurring inflation/recession, increased government regulations and
not to mention the increased technologies occasioned by computerization and globalization
causing competition in many markets.

These changes have posed major challenges to marketers. They must design appropriate
strategies in order to survive in this ever-changing environment. They must develop societal
orientation and an awareness of their social responsibilities. Despite all these, the marketers
must satisfy the consumer wants and needs as well as generating profits for their firms.

1.0 MARKETING
1.1 Introduction
The term marketing is one that is widely used and misused at the same time. To some, it has
an image of glamorous and exciting careers; to others, it concerns the cynical exploitation of
consumers using a variety of means of persuasion. Certain marketing activities such as selling
and advertising are highly visible and often form the central component of many people’s
understanding of marketing. In practice, though marketing as business activity is much
broader than just these activities, it is not always glamorous and rarely does it involve
persuading consumers to buy what they don’t require or desire.
Therefore, marketing deals with understanding, creating, communicating and delivering
customer value and satisfaction at the very heart of modern marketing thinking and practice. It
can be referred to as the ‘delivery of customer satisfaction at a profit’ (Kotler and Armstrong,
2002).

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Marketing has twofold goals namely:
▪ To attract new customers by promising them superior value
▪ To keep current customers
Therefore, sound marketing is critical to the success of every organization (large or small, profit
or non-profit making, domestic or global firms). Current successful companies have one thing
in common: they are strongly customer focused and heavily committed to marketing. Today
marketing must be understood not only from the old sense of making a sale ‘telling and selling’
but in the new sense of customer satisfaction.

In contrast selling only occurs after a product has been produced, but marketing starts long
before a company produces a product. It is therefore a homework that marketers undertake to
assess customer needs, measure their extent and intensity and determine whether a profitable
opportunity exists in the market or not.
Marketing therefore, means managing markets to bring about exchanges and relationships for
the purpose of creating value satisfying customer needs and wants. This can be achieved
through proper marketing management practices.

Marketing management is the analysis, planning, implementation and control of the

programmes designed to create, build and maintain beneficial exchanges with target buyers for
the purpose of achieving organizational objectives. Thus, marketing involves managing demand
which in turn involves the management of customer relationships. For example, an
organization may have desired level of demand and sometimes experience no demand, irregular
demand, too much demand or adequate demand. Marketers must therefore, find ways of
managing the various levels of demand facing tem which may mean creating demand or
reducing it.

1.2 Definitions of Marketing

Marketing is the creation and delivery of a standard of living. It involves:
(i) Finding out what the consumers want
(ii) Planning and developing the product that will satisfy those wants
(iii) Determining the best way to price, promote and distribute that product/service
Briefly, it can be stated that marketing is a total system of business activities designed to plan,
price, promote and distribute want satisfying goods and services to both present and potential
customers (Stanton, W. J).

Marketing is “a social and managerial process by which individuals and groups obtain what
they need and want through creating, offering and sharing of value with others.” Therefore,

Class notes: BBM212 SEPT-DECEMBER 2018.

marketing means working with consumers to actualize their potential needs for the purpose of
satisfying them (Kotler, P.)
With this definition, it would suffice to define these terms:
1.2.1 Needs
A need is a state of deprivation. Needs may include basic physical needs, e. g. for food,
clothing, safety, social interaction, knowledge and self-expression among others. The human
needs are unlimited yet the mean or resources to satisfy them are limited.
1.2.2 Wants
This is the society’s need that is shaped by culture and individual personality of a customer.
For example, an individual needs food but wants a hamburger, irio, ugali, matoke, French
fries, etc. Consumer wants are shaped by the society one comes from. This gives him/her the
orientation to the consumption of a particular product or service.
1.2.3 Demand
These are human wants that are backed by the purchasing power of an individual. Consumers
view products as offering a bundle of benefits and choose products that accord them the best
bundle for their money. That is, for an ordinary car, the benefits may include basic means of
transportation, affordable price and fuel economy among others. Whereas, for a luxury
products (Mercedes Benz, Lexus, Land Rover Discovery, Hummer, etc), the benefits may
include luxury, comfort, speed, prestige, and so on.

1.2.4 Product
A product is anything that is capable of satisfying a need or a want (This definition is not only
limited to physical objects but also the intangible products i.e. services).
1.2.5 Services
These are the intangible products that are demanded by the consumers. They are activities or
benefits offered for sale that are essentially intangible and do not result in ownership of
anything e. g. banking, airline, teaching, hotel, tax preparation, home repair services and many
others. Therefore, products may include experience, persons, ideas, organizations and
information.

NOTE: Customer experience has become one of the tools for differentiating the marketing
offers. For example, hard rock cafe, Nandos, steers and many others, that is, consumers decide
on which events to experience which entertainment to watch which organization to support
and which ideas to adopt.
1.2.6 Customer Value
This is the difference between the value the customer gains from owning and using a product
and the cost of obtaining the product. For example, in the transport industry, customers of

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Akamba Bus, Coast Bus, Kenya Bus gain benefits such as quicker and faster services, reliable,
comfortable services whereas for those traveling by air the benefits may include reliability
comfort speed and so on.
The customers rate these services in terms of costs, efforts and time spent while using a
service. In addition they also compare the value of using certain services I. e the choice to use
one or the other (air, rail, road or water) the customers’ judgment about the products is based
on their perception. That is they act on perceived value. The main concern for the marketers is
to change the customer perception in favor of their products.
1.2.7 Customer Satisfaction
This depends on the customers’ perceived performance in delivering value relative to the
buyers’ expectation that is
• If the products performance falls short of customer’s expectation, the buyer is
dissatisfied.
• If the product performance matches the customer’s expectation, the buyer is satisfied
and
• If the product performance exceeds the buyer’s expectation, the buyer is delighted.
Therefore outstanding marketing organizations go out of their way to achieve customer
satisfaction. This leads to repeat purchase and breeds customer loyalty. Marketers must
therefore not only aim to satisfy their customers but to delight them, this is the basis of
company survival today in a competitive environment.

1.2.8 Quality
Customer satisfaction is closely linked to quality of products and services. Many marketers
have now adopted total quality management (TQM) programmes assigned to constantly
improve the quality of their offers and marketing processes.
TQM can be defined narrowly as “freedom from defects” but the customer focused
organizations define it as “The totality of features and characteristics of a product or service
that bear on its ability to satisfy customer expectations” or quality is doing something for the
customer”
These definitions suggest that companies can only achieve TQM if their products or services
meet or exceed customer expectations. Thus quality begins with customer needs and ends with
customer satisfaction.
1.2.9 Relationship Marketing
This is process of creating, maintaining and enhancing strong value-laden relationships with
customers and other stakeholders. Marketers therefore must strive to go beyond short-term
transactions to build long-term relationships with valued customers, distributors, dealers and
suppliers among others. The marketers’ main concern is to build strong economic and social

Class notes: BBM212 SEPT-DECEMBER 2018.

connections by promising and consistently delivering high quality products, services and fair
prices. This enables the organizations to build mutually beneficial relationships with their
stakeholders.
Today, most companies are striving to establish a strong marketing network in their operations
i. e. they have networks with other stakeholders with whom they have built mutually profitable
business relationships.

1.3 Historical Development of Marketing

The need for marketing arose and grew as the society moved from agriculture and individual
self-sufficiently to an economy built around division of labor, industrialization and
urbanization. In an agricultural setting, people are largely self-sufficient. That is, they grow
their own food, make their own clothes and build their own houses. At this stage, there was no
marketing because there was no exchange of goods and services.

As time passed by, the concept of division of labor began to evolve. People began to produce
what they produced best. The result was that, they produced more than they needed or less
than they needed, the foundation was laid for trade (exchange) and trade is n now the
cornerstone of marketing. Typically, marketing has evolved through three significant stages
with a fourth stage emerging recently.
1.3.1 Production Orientation Stage
Here, the production process was a simple one with the main emphasis laid on production,
which was believed to be in short supply, and the economy was characterized by shortages.
Little or no attention was devoted to marketing and production processes were very local, i. e.
within neighboring areas. The function of a sales department in an organization was simply to
sell the company’s output at a price (This was a period of up to 1930).
1.3.2 Sales Orientation Stage
At this stage, the small producers began to manufacture their goods in larger quantities in
anticipation of future orders. Further division of labor occurred and a type of business
developed to help sell the increased output, i. e. intermediaries/middlemen.
To facilitate communication and buying and selling, the various interested parties tended to
settle near each other hence the formation of trading centers. The main idea at this stage was
to sell whatever was produced and this called for heavy/substantial promotional effort to be
expended. Unfortunately, this was the period that the concepts of selling acquired its bad
reputation (This was the age of hard selling i. e the period up to 1950).

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1.3.3 Marketing Orientation Stage
Modern marketing was born with the Industrial Revolution where there was growth of urban
centers and declining rural population resulting in rural-urban migration. The emphasis here
was on the growth of manufacturing enterprises because the market demand exceeded the
available supply (demand greater than supply) but this has changed and supply has now
exceeded demand shifting the emphasis from production to marketing.
The marketers must now embrace the concept of integrated/coordinated marketing
management, directed towards the twin goal of customer orientation and profitable sales
volume. Emphasis here is on marketing rather than selling. But how well the companies have
embraced the marketing concept is still questionable.
1.3.4 Social Responsibility and Human Orientation Stage
The condition of the 1970’s led to this fourth stage, which was characterized by the concern for
the society. The emphasis here is on social responsibility on the part of marketers for their
survival in the industries. Marketers must therefore be concerned wit creating and delivering a
better quality of life rather than only a material standard of living. The rise in social
responsibility as a concept for business was highly influenced by the rise in consumerism
movement.
1.4 Marketing Concepts (Philosophies)
The five alternative (competing) concepts under which organizations can conduct their
marketing activities include:
1.4.1 The Production concept
This is a management philosophy that holds that consumers will favor products that are
available, as well as affordable. The aim of the marketer is to focus on how to improve
production and distribution since the economy was characterized by shortages (demand exceed
supply). Here, the marketers/producers are deeply concerned with production since what they
produce will quickly be sold. Product quality at this stage is not an issue.
The production philosophy is useful in two situations:
▪ When the demand for the product exceeds supply- marketers should look for ways of
increasing the production level
▪ When the product cost is too high- marketers need to improve the productivity I order
to bring the cost down.
1.4.2 The Product Concept
The marketers contend that consumers will buy products of high quality, performance and
innovative features and shun products of low quality. The emphasis here was still on
production since little marketing effort needed to secure satisfactory sales. The concept is again
more prevalent in societies with shortages of products. It is also assumed that
people/consumers are aware of product quality and will not be persuaded to make purchases.

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Therefore, a marketer at this stage should devote their energy to making continuous
improvement and innovation. That is, they should have a detailed version of the new idea
stated in meaningful consumer terms.
NOTE: A good product will not sell unless the marketer designs the right packaging, affordable
pricing; right channels of distribution, creates awareness and persuades the buyers that it is a
better product or service.

The product concept can also lead to marketing myopia. For example, the Kenya Railways once
thought that users wanted trains rather than satisfying the transportation need and overlooked
the growing challenges of airlines, buses, trucks and automobiles.
1.4.3 The Selling Concept
This concept holds that consumers will not buy products until some large scale selling and
promotional effort is expended despite the fact that they look for quality precuts (the concept is
typically practiced with unsought goods). At this stage, marketing is still looked at from the
producer’s/seller’s point of view and works best where there is over capacity. The aim is to sell
what they have rather than what the consumer requires. That is, they concentrate on sales
transactions rather than building long-term customer relationship hence involves hard selling
and ignores relationship marketing. This kind of marketing carries high risks.
The selling concept makes two assumptions:
▪ That customers who are coaxed into buying the product will eventually like it.
▪ If they do not like it, they will eventually forget their disappointment and buy it again
later
NOTE: These are gross mistakes to make about the customers. Most studies show that
dissatisfied customers do not come back for a repeat purchase and go ahead to tell ten others
about his/her bad experiences with the company and its products.
1.4.4 The Marketing Concept
It is a philosophy that holds that the achievement of the organizational goals depends on
determining the needs and wants of the consumer or target markets and delivering the desired
satisfaction more effectively and efficiently than competitors do. Decision making at this stage
starts with the customer, working backwards to ensure that the consumers’ needs are satisfied
by developing a product that is tailor-made to satisfy the need at a profit for the organization.
The marketing concept has been stated in colorful ways:
➢ “My favorite” (British Airline)
➢ “We are not satisfied until you are”
➢ “The Pride of Africa” (Kenya Airways)
➢ “All Under One Roof” (Nakumatt Supermarket)
➢ “The Better Option” (Safaricom)

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 ➢ “Your Channel, Your Choice” (KTN)
➢ “At Your Service Country wide” (Post Bank)

After developing this, an integrated marketing program involving the 4 Ps and commitment of
all the personnel in the organization is implemented. Volume of sales and profit will be realized
through repeat buying and consumer patronage (customer satisfaction). The philosophy
advocates for the sovereignty of the consumer.
1.4.5 The Societal marketing Concept
This is the newest of the five marketing philosophies. It holds that marketers are not only
concerned with satisfying the needs of consumer in the short-run but also concerned with the
long-run welfare of the society.
The societal marketing concept questions whether the pure marketing concept is adequate in
the age of environmental problems, resource shortages, rapid population growth, worldwide
economic problems and neglected social services. It contends that pure marketing concept
overlooks the possible conflicts between the consumer’s short-run wants and their long-run
welfare e. g. beer drinking, cigarette smoking and environmental degradation through pollution
among other social ills. A good example is the case of beer drinking which leads to lung cancer,
careless driving, family quarrels, etc. EABL should offer advice on how to drink moderately.
Another example is that many people see the today’s giant fast-food industry (fish, chicken and
chips-the Steers, Nandos, Wimpy, Ken Chic, etc) as offering tasty and convenient food at
reasonable prices yet many consumers and environmental groups have voiced their concerns.
Critics point out that hamburger, fried chicken, French fries (chips) and most of other foods
sold by fast food restaurants are high in salt and fat. This may harm the consumer in the long-
run.
To enhance this, the government has also come up with laws controlling various sectors of the
economy, particularly in the areas of pollution, trade, licensing, drugs, etc. Marketers should
offer an after sales service for most items to ensure their efficient use.

1.5 Role of Marketing in Society

i) People are able to consume what they would not have consumed. There is
accessibility to products due to cross-border trade, international trade, etc.
ii) Through marketing goods/services find way into the trading blocks thereby
increasing sales e.g. PTA, COMESA, European Markets, etc.
iii) Raises the standards of living for most people. Marketing has brought the various
interfaces closer to the people e. g. shopping at the internet, entertainment through
the internet, etc.
iv) Creation of employment

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 v) Preservation of the environment, e. g. laws on pollution control, consumerism
rights, etc.

1.6 Today’s Challenges facing Marketers

1.6.1 Global Economy
In an increasing smaller world, many marketers are now connected globally with their
customer and marketing partners.
➢ There has been radical transformation in the world economy, occasioned by increased
competition and liberalization of many markets
➢ Geographical and cultural distances have shrunk
➢ The world has become so small due to improvement in infrastructure
➢ Markets are expanding as well as the regional blocs
1.6.2 Changes in Technology
Technology is increasing and no one company would want to be left behind. It is the age of
computerization and internet marketing. For example, many companies are now are now
struggling to provide their services in the internet in order to take advantage of the marketing
opportunities that may be presented by the emerging technologies.

It has become the major driving force in terms of connectedness throughout the world. The
recent advancements in computer, information and transportation technology has had massive
effect on how companies deliver value to their customers. Technological advances have created
exciting new ways of learning about the customers, creating products and services tailored to
meet customer needs, distribute products effectively and efficiently, and communicate with the
customers especially videoconferencing, internet marketing, direct marketing (where they can
be able to create huge databases), on-line product testing, etc. The level of technology keeps on
changing and it is up to the marketer to keep the pace with changes.
NOTE: The internet has been hailed as the technology behind a new model for doing business.
It allows anytime, anywhere connections to information, entertainment and communication.
Companies are using the internet to build closer relationships with customers and marketing
partners and to sell and distribute their products more effectively and efficiently.
1.6.3 Income Gap
Due to massive disparities in income, the gap between the richer and the poorer is getting
wider and wider everyday, despite the fact that wages might have increased, real purchasing
power has declined (This is especially so for the developing nations) This has been accelerated
by inflationary tendencies eroding people’s income.

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Unfortunately, people’s needs and wants have increased but they lack the means to satisfy
them. Third world economies are characterized by low industrial production giving way to
right-sizing, retrenchment, etc thereby causing many industries thereby causing many
industries to close down adding insult to injury to the already suffering economies.

1.6.4 Environment Imperative and Social Responsibility

Companies must accept an increasing responsibility for their environmental impacts. That is,
they should become more socially responsible than before, they must be accountable for their
deeds e. g. their effluents, packaging materials, waste handling, etc.
1.6.5 Other Issues Characterizing the Market Place
❖ Aging population and increasing number of working women
❖ Later marriages
❖ More divorce
❖ Single and smaller families
❖ Emergence of distinct ethnic consumer groups
❖ Proliferation of more varied lifestyles
Business markets on the other hand are characterized by more demands on quality from their
suppliers, faster delivery and better services at lower prices.

1.7 Conclusion
As markets become more and more competitive and customers become more quality conscious,
the adoption of a marketing orientation becomes increasingly apparent in ensuring business
success. Thus, marketing orientation requires that consumers are seen as central to the
business and that the business focuses its attention on identifying and responding to
consumer needs as they are at present, as well as trying to anticipate future needs of the
customer. The key principle here is to be able to meet customer needs more efficiently and
effectively more than competitors do.

2.0 MARKETING ENVIRONMENT

2.1 Introduction
Businesses do not operate in a vacuum. They are affected in some way by the environment in
which they operate. This environment defines the opportunities for developing new businesses
as well as indicating areas in which the businesses are threatened or weakened.

Marketing environment can be defined as the factors and forces within and outside the
marketing environment that may facilitate or hinder the management ability to develop and

Class notes: BBM212 SEPT-DECEMBER 2018.

maintain successful transactions with its target consumers. Therefore, successful companies
know the vital importance of constantly watching and adapting to the changing environment
which keeps on changing to the extent that both the marketers and the consumers wonder
what the future may hold (the environment is coupled with many uncertainties for most
businesses).
2.2 Categories of a Marketing Environment
The marketing environment of an organization falls into two categories:
• Macro (External) Environment-Uncontrollable
• Micro (Internal) Environment- Controllable
The key component of developing a strategy in marketing is to analyze both the micro and
macro factors and try to match them with the capabilities of the organization.
2.2.1 Micro Environment
These are the forces close to the company that affect its ability to serve its customers- the
company itself, the suppliers, the distributors, competitors and the publics. The forces may
include:
(i) Company itself
In designing the marketing plan, the management takes into account the various groups. For
example, finance, personnel and equipment, R & D, purchasing, manufacturing, and so on.
This implies that management must work closely with other departments of the company. It
includes the organization culture, values, beliefs and corporate objectives, etc.
(ii) Customers
The marketers must be able to target each and every customer group and tailor-make a
product that suit their needs taking into consideration affordability of their offers.
(iii) Intermediaries
These are firms that help the companies to promote, sell and distribute their goods to final
buyers. They include resellers, physical distribution firms, marketing service agencies and
financial intermediaries as partners rather than simply as channels through which they sell
their products.
(iv) Suppliers
These are important links in the company’s overall customer value delivery system. They are
the providers of inputs for the organization to produce its goods and services. Marketers must
therefore watch supply availability (supply shortages or delays), labor strikes and other factors
that may affect the supply causing customer inconveniences. Marketers must also monitor the
cost of supplies since this may harm the company’s sales volume.
(v) Competitors
Due to the ever-increasing competition, marketers must provide greater customer value and
satisfaction than its competitors. Thus they must simply adapt to the needs of a target market

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and must strive to gain competitive advantage by positioning their offerings strongly against
competitors’ offerings.
(vi) Employees
The employees always look for a better pay and better conditions of work.
(vii) Other Publics
This is any group that has an actual or potential interest in or impact on organization’s ability
to achieve its objectives. The group may include financial publics, media publics, government
bodies and trade union local community among others.
2.2.2 Macro Environment
This concerns the broad trends and patterns that take place within a society, which affects all
firms equally. These are factors beyond the control of the organization which if analyzed can
provide invaluable assistance in the process of designing marketing strategies, identifying
profitable products and the best distribution channels to reach the consumer.
On the other hand, a careful analysis of the environment can also enable an organization to
identify developments which may be harmful to its operations and therefore adopt a proactive
stance in the action it wishes to take.
Macro environment of a firm can be broken down into the following variables:

(i) Economic Factors

This is the most important component of macro environment because it consists of factors that
affect consumer’s spending patterns. Marketers must focus their attention on the
developments within the economy, which is likely to have an impact on their businesses
directly or as a result of impact on the consumer spending. The key aspects of economic
environment are:
❖ Inflation: Leads to an increase in prices, interest rates to reaching consumer spending.
❖ Demand for a particular product: If the demand for a product or service increases, the
supply also increases. But if the purchasing power has been eroded, this may not be
possible. But if income increases, purchasing power is increased leading to increased
demands.
❖ Total income and income distribution: Most countries have their levels of income
skewed towards one side (with a few individuals controlling most of the income,
especially in the less developed countries). The rich have become much richer while the
poor have become much poorer. Marketers must therefore concentrate on the level of
income for each market, income distribution and the average income per person.
❖ Changing Consumers’ spending patterns: Consumers at different levels of income
have different spending patterns. Marketers must monitor the consumer spending
patterns, especially with an increase in income per household.

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 ❖ Unemployment: If this decreases, demand for products decreases.
❖ Economic depression or boom time
❖ Price controls
❖ Natural Environment: This involves the natural resources, which are needed as inputs
by organizations. The environmental concerns have grown immensely. In many cities
around the world, air and water pollution have reached dangerous levels. World
concerns continues to amount about the depletion of the earth’s ozone layer. Marketers
should therefore be aware of the several trends in the natural environment. For
example, shortages of raw materials, increased pollution, increased government
intervention, etc.
NOTE: Today, the concern for the environment has given rise to the Green Movement. That is,
enlightened companies go beyond what the government dictates, thus developing
environmentally sustainable strategies in an effort to create economy that the planet can
support indefinitely. They are responding to the consumer demands with ecologically safer
products, recyclable or biodegradable packaging, better pollution controls and more energy-
efficient operations.
(ii) Demographic Factors
This refers to the study of human population inn terms of size, density, location, occupation
and other characteristics. It includes components like:
❖ Total Population: The higher the population, the higher the demand for the products.
❖ Population Distribution: In areas that are densely populated, the demand for the
products is assumed to be high.
❖ Changing Age Structure of the Population: The higher the number of people within
an age bracket, the higher the demand for certain goods. Marketers have a challenge of
creating products that suit every age group.
❖ Population Growth: Growth rates exert pressure on the available resources as well as
having marketing implications in terms of production of goods and services.
❖ Dependency Ration: In Kenya, there are fewer wage earners with a very high
dependency level. This is coupled with unemployment and older parents normally
depend on working children. This reduces the amount of disposed income per wage
earner.
❖ Geographic Shifts in Population: Moving to towns creates congestion, pressure on the
available social amenities which reduce the standards of living. It also includes
migration from one country to another.
❖ Level of Education: Dictates the behaviour of the consumer. The more affluent a
society is, the higher the status, lifestyle, consumption pattern among others.

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 ❖ The Working Woman Concept: More women are now found in working places, which
creates additional income to the family, increased demand for products required by
these women.
(iii) Political-legal Factors
This is concerned with government policies and regulations governing certain areas of the
economy. When a government makes a policy statement, it becomes law and the concern of the
marketer is to scan the environment and make use of laws that are favorable to him/her and
may sometimes lobby to make the government act in his/her favor.

The political environment consists of laws, government agencies and pressure groups that
influence and limit various organizations and individuals in a society.
❖ Laws Regulating Business: Well-conceived legislation encourages competition and
ensures free markets for goods and services. Therefore, the government develops public
policy to guide commerce. That is, every marketing activity is subject to laws and
regulations.
Business laws are enacted for three reasons:
 To protect the companies against competition and unfair practices
 To protect the consumers
 To protect the interests of the society
❖ Increasing Legislation: Legislation affecting business activity has increased over the
years. They include areas like competition, fair trade practices, environmental
protection, product safety, truth in advertising, packaging and labeling, pricing and
other important areas.
❖ Changing Government Agency Enforcement: Marketers operating across the borders
will encounter numerous agencies put up to enforce trade policies and regulations. For
example, the International Standards Organizations, Food and Poison’s Act, Workman’s
Compensation Policy, Employment Act, Consumer Product Safety Act, Children’s Act,
Environmental protection Act, Export Compensation Act among other laws.

NOTE: Since new laws and their enactment will continue to increase, marketers must watch
these developments when planning their products and marketing strategies. They need to know
the major laws governing competition, consumers and the society.

❖ Increased Emphasis on Ethics and Socially Responsible Actions: Business

organizations are governed by social codes and rules or professional ethics. Companies
go beyond the regulatory framework and ‘does the right thing’. These socially

Class notes: BBM212 SEPT-DECEMBER 2018.

 responsible companies actively seek out ways to protect the long-run interests of their
consumers and the environment.
(iv) Socio-cultural Factors
These are institutions and other forces that affect the society’s basic values, perceptions,
preferences and behaviour. The market’s behaviour and consumption patterns are shaped by
the society’s values and beliefs. The major cultural values of a society are expressed in people’s
views of themselves and others as well as in their views of organizations, society, nature and
universe.
It can also be defined as the specific influence on society and cultural structures, for example,
social groups, habits, religion, languages and many other differences. The implication is that
every society has its own norms, attitudes and perceptions that may affect marketing efforts
uniquely.

In many African societies, there are defined roles for men and women, while in the U. S., the
unisex roles are dominant. Some societies may be classified into low, medium and high
classes. This is a challenge to marketers because they have to appeal to each group differently
in terms of income, lifestyle, perception, attitude, likes and dislikes and other areas of
uniqueness.
The social-cultural aspect of a society has led to the development of social institutions e. g.
Consumer Movement, Green Belt Movement and Select Committees among others. It helps to
check the standards of goods and services and even fairness of policies. That is, these bodies
advocate for fairness, which may be contained by the following:
❖ Cultural values: What the society believes, quality, image fairness, etc.
❖ Moral Values: What is acceptable to the society
❖ Attitudes/beliefs/perceptions: these factors are subjective and hard to quantify.

The following Cultural values can affect marketing activities:

➢ Persistence of Cultural Values: People in a given society hold specific beliefs and
values which have high degree of persistence. For example, the British and the
Americans believe in working hard, donating to charity, being honest and other
behavioral patterns. These beliefs and values are passed on from parents to children
and are reinforced by schools, churches and the environment at large. Marketers must
therefore understand the target market’s beliefs and values.
➢ Shifts in Values and Beliefs: Despite the fact that core values are fairly persistent,
cultural swings or changes do occur. Marketers must therefore learn to predict the
cultural shifts within a society in order to spot new opportunities or threats.

Class notes: BBM212 SEPT-DECEMBER 2018.

 (v) Technological Environment
Technology is a dramatic force now shaping the destiny of most organizations. That is, it
changes rapidly. It has released such wonders as the mobile phones, computers, organ
transplants, human cloning, automobiles, T.Vs; Aero planes and so on have created such
horrors as chemical weapons, 3nuclear missiles, assault rifles, etc.

Technological advances focus on the way the technology (both the level and rate of change) will
affect the way an organization undertakes its business. It’s of great implication to marketers in
the area of new product development, customer satisfaction and also its role in controlling and
standardizing quality of products and services. New technologies also create new markets and
opportunities.

Technology has come up with computerization for many businesses and marketers are striving
to computerize their operations. Some are trying to enlist their services in the internet. Internet
marketing is increasingly becoming an important aspect of the economy today. The age of
technology has also enabled consumers to get better products and services e. g. ATMs.

Technology has facilitated faster production of goods and services and enabled businesses to
earn economies of scale arising from large-scale production. The marketers must know the
level of change in technology in every target market.
(vi) Competitive Factors
With globalization, liberalization and computerization, stiff competition has set in various
sectors of the economy. Many economies have opened up their doors for free trade increasing
the number of competitors in every sector. Customers have also become knowledgeable due to
high education and increased awareness hence demand high quality products. Therefore, the
marketers must know who their competitors are, their products, objectives, strategies,
strengths and weaknesses among other factors. This will enable them to react to competition
appropriately.
Marketers must also know the following:
❖ Strength of competitors
❖ Threats of new entrants
❖ Availability of substitutes i. e. products
❖ Bargaining power of suppliers/distributors
❖ Bargaining power of buyers

Class notes: BBM212 SEPT-DECEMBER 2018.

 (vii) Geographical Factors
The concern of marketers is to design strategies that suit the need of each geographical region,
for example location, district, neighborhoods, countries and continents. Consumers are found
in different regions of the world and have different tastes and preferences. Therefore, marketers
must be able to target them with different strategies for example customer characteristics
(income, size, growth potential, etc), climatic conditions, behaviour patterns, etc.
2.3 Conclusion
Firms must be able to develop a successful market oriented approach to business. That is, they
must have a thorough understanding of the environments in which they operate. This will
enable them to design competitive strategies to face the ever-changing environment.
2.4 MARKETING INFORMATION SYSTEM (MIS)
MIS consists of people, equipment and procedures to gather, sort, analyze, evaluate and
distribute needed, timely and accurate information to marketing decision makers.
Note: MIS starts and ends with the marketing managers.

The Marketing Information System

Marketing Marketing
Managers Environment
• Analysis • Target Markets
• Planning Assessing I. R. S M. I • Marketing channels
Information
• Implementation • Competition
needs
• Organization • Publics
• Control • Macro Env. forces
•

Distribution I. M. R
of Analysis
information

Marketing Decision & Communication

Class notes: BBM212 SEPT-DECEMBER 2018.

The MIS interacts with managers to:
Assess information needs
Develop needed information
Information Analysis
Distribute information to managers
2.4.1 Assessing Information Needs
A good MIS should balance the information the managers require against what they really need
and what is feasible to offer given the organization’s resources. This can be ascertained
through interviews with managers. Care should be taken on too much information as well as
too little information: both can be dangerous. The company also looks at the cost of obtaining
the information from elsewhere in terms of affordability.

2.4.2 Developing Information

The information the marketing managers require may be obtained from:
i) Internal record system
This consists of information gathered from operations within the company, to evaluate
marketing performance and to identify marketing problems and opportunities. Many
companies now build extensive databases, computerized collections of information obtained
from data sources within the company.
I.R.S includes sales figures, receivables, payables, costs and cash flows and other sources. This
information is vital for day-to-day planning, implementation and control of decisions and can
be used to evaluate company performance, detect problems and create new marketing
opportunities.
ii) Marketing Intelligence System (MIS)
It is the systematic collection and analysis of publicly available information about competitors
and developments in the marketing environment. It is therefore the every day information
about developments in the environment. It determines what intelligence is needed, gathers,
analyses and distributes the information about the company’s competitive, technological,
customer, economic, social, political and regulatory environments and delivers it to the
marketing managers for decision making. The main goal of marketing intelligence is to improve
strategic decision making process in organizations, assess and track competitors’ actions and
provide an early warning of opportunities and threats.

Much intelligence can be collected from company’s personnel, suppliers, distributors,

competitors, annual reports, shareholders or even subscribing for on-line databases. Some
staff can also scan the available publications, summarize important news and send the

Class notes: BBM212 SEPT-DECEMBER 2018.

bulletins to the marketing managers. This improves the quality of information within an
organization.
iii) Marketing Research
This is the function that links the consumer or customer and the public to the marketer
through information used to identify and define marketing opportunities and problems: to
generate, refine and evaluate marketing actions to monitor marketing performance and to
improve understanding of the marketing process.

2.4.3 Information Analysis

Information gathered from the marketing intelligence and the company research systems
requires more analysis in order for managers to apply the information to their marketing
problems and decisions. This might involve more advanced statistical tools to find out the
relationship between variables as well as mathematical tools to enable them come up with
quality information vital for effective decision making.

2.4.4 Distributing the Information

Marketing Information has no value until the managers use it to make better decisions. The
information gathered from all these processes must be distributed to the marketing managers
at the right time. With the recent developments in information technology, most companies are
decentralizing their marketing operations and most of the times; the managers have direct
access to information network through personal computers and outside sources.

2.5 Conclusion
Marketing research is a vital tool in decision making within an organization. Care should be
taken in order to guard against too little or too large amount of information. The information to
the decision makers must also be prompt so as to make quick decisions and capitalize on the
opportunity at hand.

Class notes: BBM212 SEPT-DECEMBER 2018.

 3.0 CONSUMER BEHAVIOUR
3.1 Introduction
Definition of marketing stresses the importance of understanding and responding to consumer
needs. To do this effectively, it is important to develop an understanding of buyer behavoiur.
This means understanding how consumers make decisions about purchases, what motivates
them and what their expectations are for various products.

Consumer behavior refers to the behavior exhibited by individuals or organizations in planning,

purchasing and using economic goods and services. The ultimate concern for the marketer is
what causes the act of purchase or non-purchase

3.2 Reasons for Studying Consumer Behaviour

(i) The way a buyer behaves dictates the company’s marketing, production and other
strategies. This has a great impact to its success or failure. For example, every consumer
with his/her individual demand constitutes a vital element of the total demand figure for
the organization.
(ii) The consumer behaviour is a major component of the marketing concept. A firm should
therefore create a marketing mix that satisfies consumer needs and wants given the
changes in their behaviour. To be able to do this, a marketer has to consider the reasons
for consumer behaviour, i. e. why, when, where, how and who.
(iii) By gaining better understanding of the factors that affect consumer behaviour, a marketer
is better placed to predict how consumer will respond to the firm’s total marketing strategy.
(iv) Exposure to stimulus has been known to activate desired response and marketers
accomplish this through advertising.
(v) It increases company sales through satisfied consumers in terms of repeat purchases,
word-of-mouth and consumer loyalty. It hence enables companies to be profitable in
business.
(vi) Understanding consumer behavior decreases the level of risk especially in purchasing or
launching of new products.
(vii) It helps in implementing effective marketing activities e. g. planning hence proactive
strategies. It also encourages flexibility in designing the marketing program.
(viii) As consumers, we benefit from one’s own consumption patterns. We would be able to
understand why we buy, when, what, where, etc. This helps us to be better customers.
(ix) As scholars, it helps us to understand why consumers act in a certain consumption
way or related pattern.

Class notes: BBM212 SEPT-DECEMBER 2018.

3.3 Factors influencing Consumer Behaviour
3.3.1 Cultural Factors
These exert the broadest and deepest influence on consumer behaviour. Here, we talk about
roles played by the consumers’ culture, sub-culture and social class.
(a) Culture: This is the most basic cause of a person’s want and behaviour. Human
behaviour is greatly learned especially from the society. For example, one acquires values,
perceptions, involvement in activities, efficiency and practicality, progress, individualism
and many other behaviour patterns.
Every group in a society has a culture and cultural influences on buying behaviour vary
greatly from one country to the other. Failure by marketers to adjust to these differences
can result in ineffective marketing programmes or embarrassing mistakes.
(b) Sub-culture: This consists of smaller sub-cultures or groups of people with shared value
systems based on common life’s experiences and situations that provide more specific
identification and socialization for its members. This includes nationality, racial groups,
religion and geographic region which make up important market segments. For example,
one may be from a culture that places more importance on education, business/wealth,
etc. Hence, acquires such orientation.
(c) Social class: These are relatively permanent and ordered divisions in a society whose
members share similar values, interests and behaviors. There are various social
stratifications in any society, for example, the various caste-systems are known for
certain roles and cannot change their caste membership. Members of a social class share
similar values, interests, behaviour, education, places of residence, and so on.
Social classes differ in their dress, speech, pattern of consumer behaviour, educational
preferences, etc. Marketers must therefore identify the various social classes in every
society and tailor-make the products and services to meet customers’ needs and wants.

3.3.2 Social Factors

(a) Reference Groups
These have direct influence on one’s attitude and behavior. They include family members,
friends and neighbors. It exposes an individual to certain behavior and lifestyles and creates
pressures for conformity. Marketers’ concern is to identify the reference group and targets
them with program tailored towards meeting the needs and wants of that group.
(b) Family
This is the most influential social group. Through this, one acquires an orientation towards
religion, politics, buying behavior, education, love and self-worth among others. Marketers are
interested in the buying roles and relative influence of husbands, wives, children and their

Class notes: BBM212 SEPT-DECEMBER 2018.

 buying behavior. Buying patterns that are male dominated are taking insurance policies,
buying cars, acquiring property, etc. Marketers selling households goods should target the
wives and for entertainment, marketers should target youngsters.
(c) Roles and Statuses
A person belongs to many groups, for example the family, clubs, organizations, associations,
etc. The person’s position in each group can be defined in terms of both the role and the
status. Each role carries a status reflecting the general esteem given to by the society. People
often buy products that communicate their role and status in the society; i. e. people often buy
products that communicate their role and status in the society.

3.3.3 Personal Factors

Buying behavior is influenced by personal characteristics. That is age, sex, economy,
occupation, personality, lifestyle, and self-concept and so on.
(a) Age: people of various ages buy different products.
(b) Occupation: Blue-collar workers will buy more rugged work clothes whereas white-collar
workers will buy more business. Marketers’ concern is to identify the various groups and
develop marketing strategies for each of them.
(c) Economic Situation: This depends in income, savings and assets. For example, attitudes
towards spending will influence how much one spends on what. Marketers of sensitive
products pay attention to changes on personal income, savings, etc.
(d) Lifestyle: This is a person’s pattern of living as expressed in his/her psychographics. It
involves measuring a person’s activities, interests and opinions which portray the whole
person. Since people depict various lifestyles, marketers must be cautious about which
lifestyle is exhibited.
(e) Personality: This is a person’s distinguishing psychological characteristics that lead to
relatively consistent and lasting responses to his or her own environment. Personality is
usually described in terms of traits such as self-confidence, dominance, defensiveness,
sociability, autonomy, aggressiveness, adaptability, etc.
3.3.4 Physiological Factors
A person’s buying choices are influenced by innate factors such as:
(i) Motivation
This is an inner drive or the urge that is sufficiently pressing to direct the person to seek
satisfaction of the need. Customers are motivated by different factors, for example Maslow’s
Hierarchy of needs.
(ii) Perception
A motivated person is ready to act. Therefore, the perception of the situation will influence
his/her action. Perception is the process by which people select, organize and interpret

Class notes: BBM212 SEPT-DECEMBER 2018.

 information to form a meaningful picture of the world. People can form different perceptions
due to the three different perceptual processes namely:
Selective attention
Selective distortion; and
Selective retention
(iii) Learning
This is a change occurring in an individual’s behavior arising from experience (Human behavior
is learned). Learning occurs through drives, response and reinforcement. For example, if the
behavior exhibited is rewarding, the person will always tend to repeat the behavior pattern. The
practical significance of learning to marketers is that they can build up demand for a product
by associating it with strong drives, using motivating cues and providing positive
reinforcement.
(iv) Beliefs
Through learning, people acquire beliefs and attitudes which in turn influence their behavior
pattern. It is a descriptive though one has about something. Marketers are interested in the
beliefs that people formulate about specific products and services since these beliefs make up
product and brand images that affect the buying behavior.
(v) Attitudes
It describes a person’s relatively consistent evaluation, feelings and tendencies towards an
object or an idea. Attitudes put people into the frame of mind ++that of liking or disliking
things, of moving towards or away from them. For example, attitudes like, “Buy the best,” or
“Creativity and Self-expression are among the most important things in life,” (Japanese
Slogan).
3.4 Consumers’ Buying Roles
There are 5 major roles or decisions.
The Initiator: This is the first person who suggests the idea of buying.
The Influencer: This is the person whose view or advice influences the decision.
The decider: One who decides the buying of the product, i. e. what to buy and how.
The buyers: One who makes the actual purchase.
The user: One who consumes/uses a product or service
3.5 Types of Buying Decision Behavior
Buying decision varies from what is to be purchased. Complex and expensive purchases are
likely to involve more buyer participation deliberation. Four major consumer buying decision
behavior based on the degree of buyer involvement and the degree of differences among brands
have been identified. They fall into 2 major categories:-
High Involvement
Low Involvement

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3.5.1 High Involvement Buying Behavior
i) Complex Buying Behavior
This is a consumer buying behavior in situations characterized by high consumer involvement
in a purchase and significant brand differences. Consumers are therefore highly involved in a
purchase decision and are aware of significant differences among brands, especially when the
product is expensive but infrequently bought, risky and highly self-expressive, like the personal
computers, the consumer does not know much about the product and have to learn about it.

The buyer develops beliefs and perceptions about the product and lastly makes a thoughtful
purchase choice. Therefore, the concern of the marketer is to understand the information
gathering and evaluation behavior of high involvement consumers, avail the information to
enable the consumers learn more about the product, its attributes and their relative
importance. This means that marketers must understand the complex buying behavior of
various customers, differentiate their brand features and motivate the store sales force and the
buyer’s acquaintances to influence the final brand choice.

ii) Dissonance-reducing Buyer Behavior

This is a consumer buying behavior in situations characterized by high involvement but few
perceived differences among brands. The consumer sees little differences in the brands. It is a
high involvement decision because the product is expensive, infrequently bought and the
consumer will take his/her time shopping around and purchasing quickly, responding
primarily to a good price.

After the purchase, the consumer may experience post-purchase dissonance (after-sale
discomfort or anxiety) when they notice certain disadvantages or hear something about other
products not purchased and will always be alert for information that justifies his/her decision
about the purchase. To counter this bad feeling by the consumers, the marketer’s after-sale
communications should provide evidence and support to help consumers feel good about their
brand choices.
3.5.2 Low Involvement Buying Decisions
i) Habitual Buying Behavior
Here, the products are bought under conditions of low involvement and few significant
perceived brand differences for example salt, sugar, bread, matchbox, etc. The consumers go to
the supermarket and reach out for the brand as a habit and not out of strong loyalty. This
shows that buyers have low involvement with low-cost products frequently purchased.
Consumers do not search for information about the brands but get the information as they

Class notes: BBM212 SEPT-DECEMBER 2018.

watch T. V. advertisements. Repetitive advertising creates brand familiarity rather than loyalty.
They do not form strong attitude towards a product. That is, the purchase of a product is by
familiarity.

A marketer of low involvement products with few brand differences finds it effective to use price
and sales promotions to stimulate product trial since consumers are not committed to any
brand. Adverts should only stress a few key point, use symbols and imagery that can be
remembered and marketers can link the product to a high involvement purchase brands. The
adverts should encourage high repetition of short-duration messages. This is in order to raise
the consumer involvement to a moderate level.

ii) Variety-seeking Buying behavior

The purchase decision is characterized by low consumer involvement but significant perceived
brand differences. Hence, there is a lot of brand switching especially with cookies, sweets,
chocolates, biscuits, etc. A consumer picks a product without much evaluation but evaluates
the product during consumption and next time the same consumer may reach out for another
brand. Therefore, brand switching occurs out of variety rather than satisfaction.
The market leaders have to encourage habitual buying behavior by dominating the shelf space
in the supermarkets, avoiding out of stock conditions and sponsoring numerous reminder
advertising. The challengers will encourage variety-seeking by offering lower prices, special
deals, free samples and advertising that presents reason for trying something new.

3.6 The Buyer Decision Process

There are 5 main stages:
Problem Recognition
Information Search
Evaluation of Alternatives
Purchase Decision
Post-purchase decision

3.6.1 Problem Recognition

The buying process starts when a buyer recognizes need/problem which can be triggered by
internal/external stimuli, for example thirst, hunger, security, anger, pain, etc. Marketers need
to know the circumstances that trigger a need then develop a marketing strategy to trigger a
purchase.

Class notes: BBM212 SEPT-DECEMBER 2018.

3.6.2 Information Search
The customer will search for information about a product or service while paying attention to
adverts, friends, colleagues and other sources in the office or within their surrounding.
Information search depends much on the customer’s drive, the value placed on additional
information and the satisfaction to be received from the search. Therefore, companies or
marketers must strategize to get their brands into awareness set, consideration set, and choice
set so that the company can plan for a competitive appeal.
3.6.3 Evaluation of Alternatives
A consumer has a need to satisfy. He/she looks for certain benefits from the product and sees
each product as a bundle of attributes with varying abilities of delivering benefits. He/she
develops brand beliefs and brand image. This depends on selective perception, selective
distortion and selective retention. Then he arrives at attitudes about the product through an
attribute evaluation. The consumer has a set of alternative products and based on attributes
he/she will make a purchase decision by comparing his/her preferences about each product.
Marketers are required to find out how they actually evaluate brand alternatives in order to be
able to influence the buyer’s decisions.
3.6.4 Purchase Decision
This is the stage of the buyer decision process where the consumer actually buys the brand on
the basis of preference. The stage takes into consideration the customer’s attitude towards the
brand and also situational factors (e.g. loss of job).

Sometimes the consumer’s decision to modify, post-pone or avoid a purchase decision may be
heavily influenced by the perceived risk. This varies with the amount of money at stake,
attribute uncertainty, attitude of others and the amount of consumer self-confidence.
Purchases of everyday involve fewer decisions and less deliberation, for example buying milk,
sugar, salt, onion, etc.

Class notes: BBM212 SEPT-DECEMBER 2018.

 Attitude of
others

Purchase
Evaluation of Purchase Decision
Alternatives intention

Anticipated
Situational
Factors

3.6.5 Post-purchase Behavior

This is the stage of the buyer decision process in which consumers take further action after
purchase based on their satisfaction or dissatisfaction. After purchasing the product, a
consumer experiences some level of satisfaction or dissatisfaction. A satisfied consumer is
likely to make a repeat purchase and also tell others about the brand (good-mouthing).
Dissatisfied consumer will suffer consumer dissonance/anxiety. He/she will likely not have a
repeat purchase and will discourage other potential buyers from buying the product (bad-
mouthing).
Therefore, marketers have a duty to match the performance of the product to the perceived
idea of it by the consumer:
If performance falls short of expectation-dissatisfied
If performance matches expectation-satisfied
If performance exceeds expectation-delighted

NOTE: The larger the gap between expectation and performance, the greater the consumer
dissatisfaction. The products must make product claims that truthfully represent the products
likely performance.

Dissatisfied consumers may abandon or return the product, complain to the company, go to a
lawyer, or complain to other groups especially the government agencies, private agencies

Class notes: BBM212 SEPT-DECEMBER 2018.

among others. Private action may include stop buying the product, warning others not to buy
(voice option) the product since the seller had done a poor job of satisfying the consumer.
Marketers should minimize consumer post-purchase dissatisfaction or dissonance and work to
embrace customer satisfaction at all levels of the buying process.

3.7 Major Influences on Business Buying

This can be classified into 4 categories:
Environmental factors
Organizational factors
Interpersonal factors
Individual factors
3.7.1 Environmental Factors
This includes factors in the current and expected economic environment, for example level of
demand, interest rates (recession Vs boom), technology, political/legal, social-cultural,
competitive forces, etc. Marketers have to monitor these forces, determine how they will affect
the business operations and try to convert the problems into opportunities. It also calls for
social responsibilities on the part of businesses.
3.7.2 Organizational Factors
Each buying organization has specific objectives, policies, procedures, structures and systems.
The business marketers have to be familiar with all these organizational factors. They have to
be aware of the following trends in the purchasing area:
i) Purchasing department upgrading
ii) Decentralised purchasing, especially empowering employees to purchase items e. g.
duplicate keys, coffee makers, Christmas tree, etc.
iii) Long-term contracts i. e with reliable suppliers.
iv) Purchasing performance evaluation and buyers’ professional development, an incentive
system to reward purchasing managers for good buying performance.
v) Centralized purchasing separates divisions from undertaking the purchase function.
3.7.3 Interpersonal Factors
Most companies participating in purchase decisions exhibit different behavior patterns with
differing interests, authority, status, empathy and persuasiveness among others. Marketers
must be able to know how to deal with these varying interests that consumers may exhibit.
3.7.4 Individual Factors
These include personal motivation, perception, and preferences. They are influenced by age,
income, job position, personality, attitudes and culture. People have various buying styles e. g.
“Keep-it-simple buyers,” “Own Expert Buyers,” “Want-the-best buyers,” “Want-everything-done
buyers” and “Toughies.” Marketers must be able to design the best appeals to each group.

Class notes: BBM212 SEPT-DECEMBER 2018.

3.8 Conclusion
Understanding customer behavior is of utmost concern to the firms because the customers are
the main reason for any business’ existence, since without the customers to sell to, the
business cannot operate. Therefore, organizations must strive to meet the customers need
better than competitors do. Every customer that deals with an organization should be left with
a feeling of satisfaction. This outcome leads to repeat purchase and customer loyalty.
4.0 MARKETING SEGMENTATION
4.1 Introduction
All consumers are not identical and therefore they do not have the same motivations, needs or
patterns of behavior. Due to this, it is common for organizations to attempt to divide their
markets into groups which may have particular attitudes or characteristics in common.
Provided that these characteristics are related to their buying behavior, it is then possible to
develop specific products and services and marketing campaigns which are tailored to the
needs of these different market segments.

Therefore, marketers today realize the fact that they cannot appeal to all customers in the
market place with one marketing programme. Buyers are now too numerous, too widely
scattered and too varied in their needs and wants or buying patterns. On the other hand,
companies themselves vary widely in their abilities to serve different segments of the market.
Therefore, each company has to identify which segments of the market it can best serve.
Market segmentation can be understood by distinguishing between mass and target marketing.
Mass Marketing
This is using the same marketing program to target the whole population (“Shot-gun” approach
or undifferentiated marketing). However, in mass marketing the seller engages in mass
production, distribution and promotion of one product for all the buyers.

The main argument for mass marketing is that it creates the largest potential market, which
leads to the lowest costs, which in turn translate into either lower prices or higher margins.
However, many factors have now made mass marketing difficult due to changing preferences
and tastes, technological, consumption patterns and advertising appeals among others.
Therefore, most companies are now moving away from mass marketing to a market
segmentation and target marketing.

Target Market
Here, the seller distinguishes major market segments, targets one or more and develops
products and programmes tailored towards each segment. That is, firms are focusing on the

Class notes: BBM212 SEPT-DECEMBER 2018.

buyers who have greater interest in the values they create (“Rifle” approach or differentiated
marketing.
4.2 Levels of Market Segmentation
There are 4 levels namely: mass marketing, Segment marketing, Niche marketing and Micro-
marketing.
4.2.1 Mass Marketing
Up to 1990s, many companies practiced mass marketing and not target marketing. Most
consumer product companies practiced mass marketing (one-size-fits-all marketing). There was
therefore mass production, mass distribution and mass promotion of the products. For
instance, Henry Ford widely produced only one drink for the whole market, hoping it would
appeal to everyone.
4.2.2 Segment Marketing
The marketer isolates broad segments that make up a market and adapting the marketing
strategy to match the needs of one or more segments. Therefore, segment marketing consists of
a large identifiable group within a market.
A company that practices this type of marketing recognizes that buyers differ in their wants,
buying attitudes, purchasing power and many other characteristics.
4.2.3 Niche Marketing
A marketer focuses on sub segments or niches with distinctive traits that may seek a special
combination of benefits. Therefore, a niche is a more narrowly defined group, typically a small
market whose needs have not been well served. i.e schindler
Niche marketing can be carried out by dividing segments into sub segments, or defining a
group with a distinctive set of wants, who may seek special attributes of a product for example
heavy smokers segment consisting of heavy smokers who are overweight.
Niches are normally small markets which attract one or a few competitors. Most of the time,
they attract smaller companies and niche marketers understand their niches so well that their
customers are always willing to pay a higher price (premium). Niching offers smaller companies
an opportunity to compete by focusing their limited resources on serving niches that may be
unimportant to or overlooked by larger competitors. In many markets niching is the norm.
4.2.4 Micro-marketing
This is tailoring products and marketing programs to suit the tastes of specific individuals and
locations.
It includes Local Marketing and Individual Marketing.
Local Marketing
This is tailoring brands and promotions to the needs and wants of local customer groups (i. e.
cities, neighborhoods, specific stores, etc). Target marketing is increasingly taking on the

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character of regional and local marketing programmes. For example, retailers e. g. Uchumi and
Nakumatt may customize their merchandise and promotions to match their specific clientele.
Local marketing may suffer certain drawbacks including:
i) Manufacturing and marketing costs may increase, reducing the economies of scale.
ii) Logistic problems may arise as companies try to meet the varied requirements of
regional and local markets.
iii) The brand’s overall image may be diluted if the product and message vary so much in
different localities.
Advantages of Local Marketing
i) It enables a company to market more effectively in the face of pronounced regional and
local differences in community demographics and lifestyle.
ii) Meets the needs of the company’s first-line customers: retailers who prefer more fine-
tuned product assortments for their neighborhoods.

Individual Marketing
This is the ultimate level of marketing segmentation and the micro-marketing becomes
individual marketing where the companies tailor-make products and marketing programs to
suit the needs and preferences of individual customers. It has been labeled one-to-one
marketing, customized marketing and markets-of-one marketing.
NOTE: Consumer markets are now experimenting with systems of providing custom-made
products for example textbooks, cosmetics, cars, etc.

4.3 Basics for Segmenting Consumer Markets

4.3.1 Geographic Segmentation
This calls for dividing the market into different geographical units particularly the nations,
areas, regions, neighborhoods, etc. The company can decide to operate in one or more
segments but adapt to local variations in terms of tastes and preferences.
4.3.2 Demographic Segmentation
The market is divided on the basis of demographic variables e. g. age, family size, gender,
income, religion, race, generation, nationality and social class.
4.3.3 Psychographic Segmentation
Buyers are divided into groups on the basis of lifestyles and/or personality e. g. opinions,
attitudes, perceptions, etc.

4.3.4 Behaviouristic Segmentation

Buyers are divided into groups on the basis of knowledge of, attitude towards, use of or
response to a particular product. Many marketers believe that behavioral variables like

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occasions, loyalty status, buyer readiness, benefit, usage rate and attitude are the best starting
points for segmenting markets. For example:
• Occasions: Regular or special occasions
• Benefits: quality, services, speed, etc.
• User status: users, potential, regulars, first timers, etc.
• Usage rate: non-users, medium and strong users, etc.
• Buyer readiness: unawareness, aware, informed, desirous, intending to buy, etc
• Attitude towards: enthusiastic, positive, negative, indifferent, hostile, etc.

4.4 Basis of Segmenting Business Markets

4.4.1 Demographic Factors
i) Industry - Which industries should we serve?
ii) Company size – Which size of the company should we target/serve?
iii) Location – Which geographical or regional areas should we target?
4.4.2 Operating Variables
i) Technology – What kind of technology are consumers interested in?
ii) User or non-user status
iii) Customer capabilities – What is the customer capable of?
4.4.3 Purchasing Approaches
i) Purchasing function organization structure – Whether centralized or decentralized.
ii) Power structure – Marketer should identify the key people in the organization and
find out how much power they have. They can easily influence a purchase decision.
iii) Nature of existing relationship – Strong relationship or most desirable companies.
iv) General purchase policies – Companies that prefer leasing contracts or sealed biding
or tendering.
4.4.4 Situational Factors
i) Agency – Some customers will require quick and sudden delivery system.
ii) Specific application – We have certain specific products being applied for separately
or an application for all products.
iii) Size of order – in small or large quantities.
4.4.5 Personal Characteristics
i) Buyer – seller similarity – Organizations find it easy to access customers with
similar values.
ii) Attitudes towards risks – Whether the decision makers are risk-takers, avoiders,
neutral or averse.

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 iii) Loyalty status – Look at a company that shows high loyalty to you as a supplier or
marketer.
4.5 Requirements for Effective Segmentation
(a) Measurable: In terms of size, purchasing power and characteristics of the segments.
(b) Sustainable: Larger and profitable enough to serve or be served, i. e. the largest
possible homogenous group worth going after with a tailored marketing program.
(c) Accessible: The market should be accessible and served effectively.
(d) Differentiable: Distinguishable and respond differently to different marketing mix
elements.
(e) Actionable: Worth a strategy/programme.

4.6 Benefits of Market Segmentation

(i) Leads to efficient use of resources and enables companies to build profitable segments.
(ii) Helps in designing the marketing strategies
(iii) Helps in product development
(iv) Encourages flexibility and leads to differential pricing. It also enables marketers to
review the activities of their segments and make adjustments.
(v) Leads to confidence in terms of specialization i. e. makes selling easier.
(vi) Encourages training of customers and staff.
(vii) Products are fine-tuned to suit various market segments and knowledge of consumer
behavior to relationship marketing hence accuracy in dealing with a target market.

4.7 Conclusion
Today market segmentation is becoming an important and an essential approach to be adopted
by firms across the board. Its prime function is to identify and group customers with similar
characteristics and similar needs as far as the goods and services are concerned. The
identification of market segments and the categorization of consumers across those segments
provides the basis not only for the development of the products and services which are better
tailored to the needs of consumer; it also provides valuable information which can be used in
developing efficient and effective promotional campaign.

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 5.0 MARKETING MIX 1: PRODUCT DECISIONS

5.1 Introduction
A Product can be defined as anything that can be offered to the market for attention,
acquisition, rental, use or consumption that might satisfy a need or a want.
Products marketed can include:-
i) People Michael Jordan, Rose Muhando,david beckham, Jua Cali etc
ii) Services Banking, haircut, education, etc
iii) Ideas Family planning, HIV/AIDS etc
iv) Organizations SEKU, Safaricom, Kenya Airways etc
v) Places Hawaii, Mombassa, Kisumu, etc.

5.2 Levels of a Product

(a) Core Product
This is the most basic level of a product, i.e. the core problem solving benefits that consumers
look for in a product. That is, it addresses what the consumer is really buying, for example,
hotel- “rest and sleep,” of in factory, the manufacturers make cosmetics, but they sell hope.
Therefore, the core product stands at the centre of the total product.
The marketer’s main concern is to identify the core benefits the product will provide to the
customers and understand the total consumer experience that surrounds the purchase and
use of the product.
(b) Actual Product
Marketers must turn benefits into an actual product around the core product, for example,
hotel room includes bed, bathroom, towel, desk etc; OR for Coke, its name, features,
packaging, convenience, portability, quality and other attributes have all been combined to
deliver the core benefits.
(c) Expected Product
This is a set of attributes and conditions that buyers normally expect and agree to when they
purchase the product, for example, a clean room, clean towel, working bulbs and relative
degree of silence.
(d) Augmented Product
This meets the customer’s desires beyond their expectations, for example, the hotel manager
may augment his/her product by including a remote control T. V. set, fresh flower, rapid
check-ins, fine dining, etc. It describes what is included in the product today.
The product planner builds an augmented product around the core and actual products by
offering additional consumer services and benefits. For example, when a consumer buys Sony
camcorder, the equipment must provide a complete solution to the consumers’ picture taking

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problems. That is, the manufacturers must provide warranty on parts, instructions on how to
use the product, quick repairs services among others.
(e) Potential Product
It encompasses all the augmentations and transformations that the product might ultimately
undergo in the future- its possible evaluation. Companies search aggressively for new ways to
satisfy the customer, for example, en-suit hotel rooms. They not only add benefits that satisfy
their customers but, also surprise and delight them.

5.3 Product Classification

This falls into two major categories:
• Consumer Products
• Industrial Products
Consumer Products
These are products bought by consumers for final consumption. They are classified according
to the way consumers go about buying them. The examples include:
i) Convenience Goods
These are products that are bought frequently, immediately and with less comparison and
minimum buying effort, for example, cigarettes, soap, salt, bread, chocolates, newspaper, fast-
food, etc. They are usually low-priced and the marketer distributes them through many outlets
making them readily available and avoiding out of stock conditions (intensive distribution).
Convenience goods can further be classified into:-
➢ Staple goods – purchased on a regular basis
➢ Impulse goods – purchased without any planning
➢ Emergency goods - purchased when a need is urgent
ii) Shopping Goods
These are usually expensive products and infrequently bought by the consumers. Consumers
compare them on the basis of suitability, quality, price, and style. The consumers spend a lot
of time and effort in gathering information and making comparisons on the suitable brands.
Examples include: - furniture, cars, major electronic appliances etc.
Shopping goods are usually distributed through fewer outlets but they provide deeper sales
support to help customers in their comparison efforts (selective distribution).
iii) Specialty Goods
These are consumer products and services with unique characteristics or brand identification
for which a significant group of buyers are willing to make a special purchase effort. Examples
include luxury cars, designer clothes, specialized services like medical, legal, marketing,
accountancy etc. The consumers normally do not compare products in terms of prices of
quality.

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 iv) Unsought Goods
These are consumer products that the consumer either does not know or knows about them,
but does not normally think of buying. Examples include insurance policies and blood
donations. Marketers must therefore create awareness through advertising, personal selling
and other marketing efforts so as to enlighten the market about them.

Industrial Products
These are products purchased by individuals or organizations for further processing or for use
in conducting a business. Examples include materials and parts, capital items and supplies
and services among others.
5.4 The Product Life Cycle (PLC)
Products have life cycles that can be divided into four stages as shown in the figure below:

Sales
Volume

1 2 3 4

Life Cycle Stage

5.4.1 Characteristics of each Stage

(i) Introduction Stage
The introductory stage starts where commercialization of a product stops, i.e. at the end of the
new product development stage. At this stage, profits are negative because of low sales and
heavy distribution and promotion expenses. The firms with products at this stage experience
high costs of production, net losses and limited distribution and coverage for the products. It is
a very risky and an expensive stage.
Competition is low because of few competitors who sell same versions of the product. Attention
is focused on consumers who are most ready to buy, usually the high income, innovators.

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Prices tend to be high due to cost of production, technological problems and need for higher
margins to support future production. Marketers have to concentrate on scheming and
penetration strategies.
(ii) Growth Stage
This stage is marked by rapid increase in sales and profits. The implication is that, the majority
of consumers have not adopted the product and production costs are still higher. Since this
stage is the most attractive of all the PLC stages, competitors are attracted into the market. The
increased competition leads to wider distribution, and factory costs of operation may raise.
Prices may fall or remain stable depending on the industry’s cost structure. Promotion
expenditure may be lowered or raised to meet the level of competition. Marketers therefore
concentrate on strategies like improvement of quality, modification and addition of more
attributes to the product.
(iii) Maturity Stage
This is a stage where market gets to a mature stage. That is, the market/consumers are well
aware of the product being sold in the market. The rate of growth in sales will slow down as
production matures. That is, the level of sales and profits will increase but, at a declining rate.
Profits may level down.
Due to this, the level of competition may decrease in the industry because sales are not
growing and firms are no longer attracted into the market. The maturity stage lasts longer that
any of the stages in the history of a product. Therefore, marketers may concentrate on product
improvement, modification and addition of more attributes.
(iv) Decline Stage
This is the last stage in the PLC. Sales decline due to over-capacity, technological advances,
differing tastes and preferences etc. The result of this is profit erosion and firms may close
down. Firms that may remain may limit their production capacity because the market has
shrunk.
Marketers should therefore use strategies like hoarding, increasing investment and divesting
from the business or shrinking the level of business

5.4.2 Criticism or Practical Problems/Challenges

The PLC faces the following challenges:
(a) Time Period
It is not easy to predict the lifespan of a product because some may go out of the market so
soon while others last forever.
(b) Shape of the Curve
The PLC curve can take the following shapes and not the conventional one.

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 Sales Decline Continuously Sales have humps Sales rise and drop fast

(c) Product Definition

The Concept of the PLC does not define what it is that is being referred to in marketing.
The term product may refer to any of the following:
➢ Product item: Specific designation of a product e.g. Lux, Colgate, Datsun, etc.
➢ Product line: A whole range of line of products e.g. detergents, cooking fat, body
lotion, etc.
➢ Product Mix: All products produced by a company e.g. Uniliver products, Coca-
cola company’s products etc.
NOTE: It seems when marketers talk of a product in the public, they refer to product items or
brands. It is logical to argue that individual brands of a product come and go than to say that
all products will disappear from the market.

5.5 New Product Development (NDP) Process

A new product is a good or service or idea that is perceived by both existing and potential
consumers as new. It may include a new product, new modifications or new inventions of a
product. This is because in each case the consumer is experiencing the product for the first
time. The process comprises of six steps:

5.5.1 Steps in the NDP Process

Step 1: Idea Generation
This is where all ideas concerning a product are generated. The ideas may be numerous but at
any given time; an organization can only develop one idea at a time, given the scarcity of
resources. Ideas generated could come from both existing and potential customers,
competitors, scientists, sales representatives, top management, employees, distributors or
suppliers among others.
Step 2: Idea Screening
All the ideas from stage 1 are screened and evaluated realistically. The company’s aim is to
identify ideas that are worth developing in terms of their feasibility given the resources

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available within the organization. The management therefore must determine the ideas that
warrant further study.
Step 3: Business Analysis/Feasibility Stage
Through forecasting, the management reviews future sales, costs, profit estimates to determine
how they comply with the company’s objectives. An idea that survives up to this stage is
expanded into a concrete business proposal.
Management should:
➢ Identify the production features for the product
➢ Estimate the market demand and the product’s profitability
➢ Establish a program to develop the product
➢ Assign responsibilities for further study for the product’s feasibility

Several techniques can be used to determine whether they comply with the company’s
objectives:
▪ Break-even analysis
▪ Pay-back period
▪ Rate of return on investment (ROI)
Step 4: Product Development
Following the successful feasibility study, marketers must develop a full product concept. That
is, ideas on paper converted into a physical product or developed into a concept that appeals to
the customers. For example, pilot models or small quantities may be manufactured or samples
of the product distributed to encourage trial ability of the consumers. A corresponding target
market is used to test the concept. The management can then come up with other evaluations
to determine production feasibility of the product.
Step 5: Test Marketing
Here, the idea is tested with the target market to see their behavior and attitude towards the
new product. Market tests and other commercial experiments are conducted to ascertain the
feasibility of a full-scale marketing program in limited geographic areas. At this stage, design
and production variables may have to be adjusted as a result of testing findings. The
management must make a final decision regarding whether or not to launch and market the
product commercially.
Step 6: Commercialization and launching
After the market has been tested, marketers must decide to go into full-scale production to
launch and market the product. Before a product is launched into the market, there are
certain considerations that must be made. These include:
i) Timing: which must be at the right time
ii) Geographical strategy: where or location?

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 iii) Target market prospects: growth potentials of the market
iv) How to enter the market: penetration or skimming strategy?

5.5.2 Diffusion of Innovation

This is the concept of explaining consumer acceptance of new products. The study of diffusion
of innovation is interdisciplinary in scope and has its roots in various fields, for example social
sciences (sociology), communication, education and marketing among others. It shows that
people adopt new products at different times. That is, in each product area, there are
“consumption pioneers” and early adopters.

The Concern for Scholars here is to find out:

i) How the acceptance of a new product spreads within a market
ii) The individual consumer decision making process that led to the
acceptance or rejection of a new product
Diffusion of Innovation has two secondary areas:
i) The diffusion process - This is a macro process concerned with the spread of a new
product from source to the consumer.
ii) The adoption process - This is the micro process which focuses on the stages
through which a consumer passes to accept or reject a new product.

5.5.3 Types of Product Innovation

(a) Continuous Innovation - This has the least disruptive influence on established
behavior pattern. It involves the introduction of a modified product. For example,
tooth-paste for smokers, clean teeth, no chloride, etc.
(b) Dynamically Continuous Innovation- This is more disruptive than a continuous
innovation but still does not alter established behavior pattern. It may involve the
creation of a modified product or a totally new product, for example, CD players,
disposables etc.
(c) Discontinuous Innovation - This requires the establishment of new behavior
pattern e. g home computers, virtual learning, and internet services among others.
NOTE: The consumer-oriented approach to innovation has been considered the most
appropriate definition for innovation. To the consumer a new product that he/she judges to be
new based on his/her perception rather than on physical features or market realities, for
example, new product packaging, new features, new attributes ( all these may look new to the
consumer).

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5.5.4 Rate of Acceptance
The rate of acceptance of new products into the market is affected by the following product
characteristics namely:
(i) Relative Advantage - This is degree to which potential consumers perceive a new
product as superior to the existing substitutes. The marketer’s concern is to highlight
the features of the product that may be essential to the consumers. E.g. Cavity-
prevention toothpaste. Tooth paste for sensitive teeth, strong healthy teeth naturally
(Colgate herbal) or even a variety of special services, cents-off coupons among others.
(ii) Compatibility - This is the degree to which potential consumers feel a new product is
consistent with their present needs, values and practices. E.g. Gillette has come up
with disposable razors, shaving cream etc. Consumers are now looking for products
that provide them with convenience and labor saving e.g. internet services, mobile
phones, fast foods etc.
(iii) Complexity - This is the degree to which potential consumers feel a new product is
difficult to understand and use. This affects their level of acceptance of the product, i.e.
the easier it is to understand, the greater the likelihood of acceptance. E.g. instant tea,
tea bags, breakfast cereals etc. These products are highly accepted due to their appeal
to the consumer desires for ease of preparation and use. E.g. the raising flour, cake
ready, fast foods, micro- wave ovens, a five- minute rice etc. Marketers must therefore
design products that are easy to use and repair.
(iv) Trial ability/ divisibility - The degree to which the new product can be tried out on a
limited basis. The greater the opportunity to try out a product, the easier it would be for
the consumers to evaluate it. The marketers therefore, must come up with smaller
quantities of the new products where possible, to encourage the consumers to try them
out. This can be enhanced through presentation and demonstration of new products.
(v) Observability/communicability- The ease, with which a product’s benefits or
attributes can be observed, imagined or described to potential consumers, especially the
degree of social visibility. This strategy works best in the physical product sector whose
features, benefits or attributes are easy to communicate or promote.
5.5.5 The adopter categories
(a) The innovators-----------------------------------2.5%
(b) The early adopter--------------------------------13.5%
(c) The early majority-------------------------------34.0%
(d) The late majority ----------------------------------34.0 %
(e) The laggards----------------------------------------16.0%

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The Adopter categories are represented in the graph below:

I II III IV V

(a) Innovators
This is the first 2.5% of the target market to try out a new product. They are venturesome and
risk takers. This group of the market usually falls under the high-income group, i.e. the cream
of the society. The innovators tend to be relatively younger and better educated than the later
adopter and the non-adopters. That is they are more receptive to unfamiliar things and rely
more on their values and judgment. In most instances, they are less brand loyal and more
likely to take advantage of special promotions e.g. coupons, discounts and others. The
marketers can therefore, use a high price to appeal to them.
(b) Early adopters
This is a more respectable people in the society. The group contains the greatest number of
opinion leaders or role models. It comprises 13.5% of the target market.
(c) Early majority
The largest group targeted by the marketers. They make a deliberate move to adopt the new
product or innovation just before the average time.
(d) Late majority
This is a skeptical group of the target market and adopts new ideas only after the average time.
Adoption of the new product may be due to economic necessity and a reaction to network
pressures.
(e) Laggards
This is the last group of the target market to adopt the new product or innovation. It usually
has an orientation (tradition-bound) towards the past and are, always suspicious of anything
new. They only adopt a product after it has become a tradition within the market or society.

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NOTE: The classification of when consumers adopt new invention suggests that marketers
should research the characteristics of the innovators and early adopters and should direct
their marketing efforts towards them.
5.5.6 Stages in the Adoption Process
Consumers go through five stages in the process of adopting new products:
• Awareness - Consumers become aware of the new product but lacks information about
it.
• Interest - The consumer becomes interested in the product and seeks any information
about the product through information search.
• Evaluation - The consumer considers whether trying out the product makes sense.
That is, the consumer evaluates the alternatives and draws conclusions about the
innovation. If evaluation is satisfactory, then he/she will try the new product.
• Trial - The consumer tries the product on a small scale to improve his/her estimate of
its value. The limited experience with the product provides consumers with critical
information, whether to adopt or reject a product.
• Adoption – It is based on the trials and favorable evaluation. The consumer decides to
make full and regular use of the new product.
Marketers are therefore concerned about how to help consumers move through these
stages and must avail all information at every stage of the adoption process.
5.5.7 Limitations of the Adoption Process
i) It does not adequately acknowledge that a need or a problem recognition stage may
precede the awareness stage
ii) It does not adequately provide for the rejection of the product after it’s trial i.e. the
consumer may never advance from the trial stage but may reject the product after
trial or never use it on a continuous basis
iii) It does not recognize that evaluation occurs throughout the decision making process
and not solely at the evaluation stage
iv) It does not adequately account for the possibility that the five stages may always
occur in the specific order suggested. That is a step may occur before the other or
skipped together e.g. there is no trial stage particularly for durable products like TV,
Fridges etc
v) It does not include the post-purchase evaluation which may lead to a strengthened
commitment (relationship marketing) or consumer dissonance and hence the
discontinuance of the product or idea.

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5.6 SERVICE MARKETING
This is the act of performance that one party can offer to another, i.e. essentially intangible and
does not result in the ownership of anything. In service marketing, the emphasis is laid on the
services marketed by businesses or professionals with a profit motive like, commercial services.
The service sector has increasingly grown in importance due to the fact that businesses have
become more complex, specialized and competitive. As a consequence, marketers have been
forced to call in experts to provide services in research, taxation, advertising, labor relations
and many others.
Service marketing has been enhanced by an increase in disposable incomes as well as the
increasing lifestyles, hence an increase in the service sector. To capitalize on the emerging
service economy many product manufacturers have diversified their operations into various
service sectors.
The special nature of service marketing stems from distinctive characteristics that create
special marketing challenges and opportunities. They result in strategic marketing programmes
that are substantially different from those of the physical product marketing.

Characteristics of Services
There are four major characteristics of service namely:
(a) Intangibility
Services are intangible, i.e. they cannot be touched, seen, tasted or heard. One cannot know
the results of a purchase until after the purchase has been executed e.g. hair cut, medical
treatment, teaching, banking and many others. To reduce this level of uncertainty, the
consumers would look for signs or evidence of service quality in terms of place, people, price
etc.
The service marketers are therefore forced to “manage the evidence” that the customers look for
in services. That is “tangibilize the intangibility”. The marketers can achieve this by
emphasizing on the service benefits, e.g. faster services, convenience, etc. For example, an
insurance company should emphasize on the benefits like: payment of school/college fees to
the clients’ children, retirement benefits, etc. Whereas, the banks could emphasize on the
benefits like faster services, lower interest rates, reliability of services, insurance packages to
the clients, variety of accounts from which the client can make a choice among others.
(b) Inseparability
Services are difficult to market because they are inseparable from the service providers and the
presence of the client is of utmost importance. That is, services are produced and consumed at
the point of production. Provider-client interaction is therefore a special feature of service

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marketing and marketers must strive to “get the services right the first time”. For example, a
dentist may create and dispense all his/her services at the same time.
This implies that direct marketing is the only possible channel of distribution used by
marketers because services are only sold in limited geographic markets. This characteristic
limits the scale of operation in many firms. One exception inseparability has is that it can be
sold by a representative of the firm, for instance tour of travel agents, insurance agents or
brokers, rental agents, etc.
(c) Variability/Heterogeneity
Services are highly variable or heterogeneous. Due to this, there is difficulty in standardizing
the services provided by the service firms. This means that provision of a service will depend on
who provides it, when provided and where provided. Examples include teaching, repair, airline
service, etc.
To ensure standardization of services marketers must:
i) Invest in good human resource, selection and training
ii) Prepare the service blue-prints that depict the service events in the organization
iii) Monitor customer satisfaction through suggestions and complaints system
iv) Pay attention to the product planning stage of their marketing programmes to ensure
consistency and to maintain high levels of quality control.
(d) Perishability
Services are highly perishable and cannot be stored for later use. For instance, professionals
charge for missed appointments, vacant seats in a cinema hall, unoccupied seats in a Kenya
bus, unoccupied seats in a lecture theater and idle mechanics in a garage among others
represent businesses that are lost forever.
In addition, the demand for services keeps on fluctuating considerably depending on the
seasons, e.g. the use of a city bus fluctuates between peak and off-peak seasons, unused golf
field during winter, etc. Therefore, the marketers should have an appropriate strategy for each
season.
Perishability may have a notable exception, i.e. the “holding capacity” (in life assurance, the
service is purchased by a client but, held by the company until such a time the service would
be required by the client/beneficiary. This constitutes a type of “storage” which is “not very
perishable,” e.g. different maturity period for various services.
The combination between perishability and fluctuating demand, offers product planning,
pricing, distribution and promotion challenges to the marketers. In some companies, marketers
monitor the idle capacity. For example, KBS manages the off-peak seasons by reducing prices
or fares or giving the consumers an attractive deal. That is, inducing the customers to travel
off-peak. The mobile phone service providers like Safaricom, Zain, Orange and Yu also offer
lower rates at night to encourage more calls.

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5.7 Conclusion
A product (tangible or intangible) is the focal point in the success of an organization. That is, if
the product is not consistent with what the consumers require, then there is very little that the
other marketing mix elements can achieve in the market. One the core products have been
developed, additional attributes or features must be added so as to differentiate the product
from competition. To do this successfully requires a regular monitoring and understanding of
both the internal and the external environment to ensure the development of a product, which
is consistent with organizational strategy and internal capabilities as well as meeting the
particular requirements of the markets being served.

New Product Development is an important component of the product strategy for all
organizations, since in effect, it is only through this that products and services can be
developed with sets of features that correspond to the consumer requirements.
6.0 MARKETING MIX 2: PRICING DECISIONS
6.1 Introduction
Price can be defined as a measure of value exchanged by the buyer for the value offered by the
seller. As such, it may be expected that the price should reflect the costs to the seller of
producing the product and the benefit to the buyer of consuming it. It can be the value placed
on a good or a service by customers at one point in time, a measure of what must be
exchanged in order to obtain a particular good, or what consumers pay for a product.
The Procedure in Price Setting Policy
i) Selecting a price objective – What a company wants to accomplish with its products
offer. This could include:
• Profit objectives – maximize its profits, target return
• Sales objectives – growth in sales, growth in market share, maintain share of the
market
• Competitive objectives – meet the level of competition
• Price leadership especially for large firms who are leaders in the various
industries
ii) Estimate the demand curve – probable quantities a product will sell at a given prices
iii) Estimate the cost curve which varies at different levels of accumulated production,
experience and for differentiated market offers.
iv) Examine the competitors, costs, prices and even offers
v) Select one of the following policies:
• Psychological pricing
• Influence of other marketing mix elements on price

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 • Company’s pricing policy
• Impact of price on other parties.
6.2 Factors affecting Pricing Decisions
6.2.1 Internal Factors
i) Marketing objectives e. g. survival, profit-maximization and market leadership
objectives
ii) Marketing mix strategy e. g product, price, place and promotion used by each
company
iii) Cost of production within the organization and at different levels of production
6.2.2 External Factors
i) the type of market and its characteristics
ii) product’s demand in the market, low or high
iii) consumer’s perception of price and value (psychological)
iv) competitors’ costs, prices and offers
v) other macro- environmental factors e.g. economic, technological, political, socio
cultural etc
6.3 Pricing Policies or Approaches
This deals with the issues of whether to offer a product at a single or many different prices,
how to price a new product, psychological pricing and promotional pricing etc.
6.3.1 Cost- plus pricing
All the costs incurred during production are totaled up and a reasonable margin is added. That
is, all costs will be covered and a desired profit level will be achieved e.g. cost-plus pricing by
intermediaries, or construction companies i.e. they add a mark-up in order to make profits
thereby increasing prices to the final consumer.
6.3.2 Value-based pricing
This is setting a price based on the buyers’ perception and not the sellers’ perception. A
company using value-based pricing may find out what value buyers assign to different
competitive offers. This kind of pricing is difficult to arrive at due to the varying consumer
perceptions.
For some consumers, a high price may signify quality or prestige while a lower price may be
viewed as a bargain or even an inferior quality. Psychological pricing is designed to encourage
purchases that are based on emotional rather than rational response s. For example, odd
pricing e. g. 199/= is viewed as lower than 200/=. The law of attractive numbers may also be
used by consumers to make a choice on a product. For example, Ksh. 88 may be viewed as
more attractive than Ksh. 99 or Ksh. 77.
Thus, more and more marketers have adopted value-pricing strategies- offering just the right
combinations of quality and good service at a fair price.

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6.3.3 Demand- Oriented Pricing
Pricing based on the demand level prevailing in the market. That is, marketers set a higher
price when demand is higher and vice versa.
6.3.4 Competition- Oriented Pricing
This is setting a price based on what the competitors charge for similar products, e.g. the
going-rate pricing. Marketers must decide to keep their prices higher or lower than competitors
depending on their objectives.
6.3.5 Professional Pricing
Used by professional people with great skill, qualification or experience. Some professionals
charge specialized fees, e.g doctors, lawyers and other professionals.
6.3.6 Promotional Pricing
This is a strategy where by the marketers temporarily price products below the list price and
sometimes even below the cost price to increase the short-run sales. This is a pricing system
that attracts customers to buy.
Grocery shops and the supermarkets will price a few products as loss leaders to attract the
customers to the stores. Marketers use a lot of bargain and appeal special event pricing,
particularly during special occasions, events or holidays, e.g. use of discounts or allowances,
cash rebates, low interest financing, free-maintenance and many other incentives.
Disadvantages of Promotional Pricing
i) Used too frequently and copied by competitors, price promotions can create “deal phone”
customers who wait until products go on sale to make a purchase.
ii) Constantly reduced prices can rebduce a brand’s value in the eyes of a customer.
The main advantage of promotional pricing is that the strategy can be used as a “quick fix”
instead of sweating it through the difficult process of developing effective long- term strategies
for building a formidable brand image.
6.3.7 Geographical Pricing
An organization must decide how to price its products in different locations (regional pricing).
Marketers that use this strategy appreciate the fact that, customers in various regions have
different characteristics, particularly demand and level of income. Others include:
i) Single and Variable Pricing
ii) Pricing of new products - Skimming or Penetration
iii) Product mix Pricing - Product line, Captive- pricing (products that must be used together),
Optional pricing (pricing of accessory products along with the main product) and by-
product Pricing in order to make the main product’s price competitive), etc.

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6.4 Importance of Pricing
i) Means of regulating the economic activities. It keeps the economy in balance.
ii) Has considerable impact on the customers e.g. the marketer may raise it and emphasize or
quality on lower it and emphasize on a bargain.
iii) One of the 4 ps that can be changed quickly to respond to changes in the environment e.g.
competition.
iv) Determines the entire marketing strategy of the company.
6.5 Conclusion
Pricing strategy is very important for the success of organization because it is the only p that
generates revenue. All others are costs to the firms. Effective pricing therefore requires a
thorough evaluation of costs of the relevant products or services.
7.0 MARKETING MIX 3: DISTRIBUTION DECISIONS
7.1 Introduction
This is the component of the marketing mix elements concerned with the processes by which
the product is made available to the consumer. Other commonly used terms for place include
distribution, delivery systems and marketing channels. It is of concern to the marketers
because the other marketing efforts would be wasted if the product is not actually in the right
place at the right time to enable a purchase to be made. Further more, it is beneficial to every
organization to give a thorough consideration to the place component of the marketing mix
since effective and efficient distribution can be an important source of competitive advantage.
Therefore a channel of distribution is the route through which products move from the point of
production to the point of consumption. It involves 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 user. It overcomes the time, place and possession gaps that separate
goods and services from those who would use them.

Examples of channels of distribution include:

i) product ---------consumer----------zero channel
ii) p--------------------R------C---------------One level channel
iii) P--------W------------R----C -------------two level channel
iv) P---------A------------R----C---------------Two level channel
v) P---------W-----------A-----R--------C------three level channel

7.2 Factors for selecting Channel Members

a) Customer Characteristics
b) Product Characteristics
c) Company Characteristics

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d) Middleman Characteristics
e) Competitive Characteristics
f) Environmental Characteristics
7.2.1 Customer Characteristics
This may include, the size of market, type of customer, geographic dispersion of the buyers,
customer buying habits, amount of quantity purchased per periods the outlets that they
purchase from among others.
7.2.2 Product Characteristics
The important factors here include the perishability of products’ usage (industrial or
household). Perishable products distributed using shorter channels whereas durable products
can be distributed using the longest channels especially if they are purchased frequently etc.
7.2.3 Company Characteristics
This includes company objectives, financial status, product mix, past channel experience and
the desired degree of channel control.
7.2.4 Middleman Characteristics
The marketers are concerned with the markets served by the middlemen, their financial
standing, the services they offer, storage capacity, their availability etc
7.2.5 Competitive Characteristics
Marketers choose channel members used by other competitors in the industry e.g. Retail
shops like Uchumi. They must therefore avail products where competitors’ products are in
order to encourage fair competition
7.2.6 Environmental Characteristics
This include factors like economic, political, legal, social- cultural factors etc. the
environmental factors may also affect channel selection. For example, sometime in Kenya,
sugar was distributed through KNTC, cereals distributed through NCPB, coffee through coffee
board of Kenya among others. Where a certain law prevails, a marketer has no choice but to
distribute through the already existing channels.

7.3 Functions of Channel Members

i) Contacting Function: Finding and communicating with the prospective buyers i.e. in
contact with most customers.
ii) Market Information or Feedback: The channels gather and distribute marketing
research and intelligence information about actor and forces in the environment needed
for planning and aiding exchange.
iii) Bulk- breaking into smaller units or Matching: They fit and shape the offer to the
buyer’s needs including activities such as grading, packaging, branding, etc.

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iv) Physical Distribution of Products: Transportation of products to the desired
destinations. This increases the market coverage for the products and services.
v) Demand Stimulation: Developing and spreading persuasive communications about an
offer e.g. through personal selling, advertising, sales promotion, etc.
vi) Advance Credit to their clients, taking this burden away from the manufacturers.
vii) Storage Capacity: Must have a warehouse for the purposes of storing excess capacity.
viii) Negotiation: Channels of distribution reach an agreement on price and other terms of
the offer so that ownership or possession can be transferred.
ix) Risk taking: They assume the risk of carrying out the channel work i.e. Risk of loss,
breakage, spoilage, etc.

7.4 Intensity of Distribution

Once the producer has decided on the general channels to be used he/she must then
determine the channels that will be used at each level.
The producer has three considerations with regards to the level of intensity.
(i) Intensive distribution
Products are carried by as many outlets as possible, e.g. anyone willing to distribute the
product especially the convenience products e.g. cigarettes, soft drink, milk, bread among
others.
(ii) Selective distribution
Producer here selects only a few distributors to distribute his/her products. Selective channel
is used by the manufacturers of specialty goods and shopping goods. Hence the products are
only found in just a few selected outlets with certain qualities.
(iii) Exclusive distribution
Getting into an agreement with a particular middleman whereby the manufacturer gives
exclusive rights to one distributor to market the product in a given market, e.g. D.T Dobie is
exclusive distributor Mercedes Benz whereas Marshalls has the right to distribute Peugeot
vehicles in Kenya.

7.5 Importance of Channel Motivation

i) Increases sales for the producers.
ii) Maintains the market feedback between customers and producers.
iii) Increases the market coverage.
iv) Increases the distribution of products etc.

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7.6 How to motivate Channel members
i) Higher margins, incentives, special deals, cooperative advertising allowances, display
allowances and sales contest (negative incentives may includes, threatening to reduce
margins, to slow down delivery or to end the relationship altogether.
ii) Boosting their morale i.e. visits by producers, establishing long-term partnerships in
order to create a marketing system that meets the needs of both the manufacturer and
the distributor.
iii) Setting attainable targets for their distributors etc.
7.7 Conclusion
The development of effective and efficient distribution networks is a central issue the future
development and success of organizations.
This has been accelerated level of technology, increased competition and heightened consumer
awareness. This has had a considerable impact on the delivery of goods and services.
8.0 MARKETING MIX 4: PROMOTION MIX DECISIONS
8.1 Introduction
Promotion in general and advertising in particular are the activities most commonly associated
with the term “marketing” although marketing orientation goes far beyond these functions. The
term promotion as a component of any marketing mix refers to the processes used by an
organization in order to communicate with its customers, both actual and potential. It involves
the specific mix of advertising, sales promotion, personal selling, public relations, publicity and
direct marketing.

8.2 The Promotion Mix Tools

8.2.1 Advertising
This is any paid form of non-personal presentation and promotion of ideas, goods or services
by an identified
sponsor through the media. Adverting offers a reason to buy. It includes print and electronic
media.
Advertising is widely used in order to reach masses of geographically dispersed buyers at a low
cost per exposure and it allows the marketer to repeat the message many times. Beyond the
widespread coverage advertising says something positive about the sellers’ size popularity and
success. Due to its public nature consumers tend to view advertised products and services as
more legitimate.

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Advantages of Advertising
i) It is very expressive. I.e. it allows the company to dramatize its products through the
artful use of visuals, print, sound and color.
ii) It can be used to build up long-term image for a product e.g. Coca-cola, Omo, Tusker,
Blue band ads etc.
iii) It triggers off quick sales.
iv) It can be used to influence, persuade and remind customers about the existence of the
brands.
v) Wider coverage of the market.
Disadvantages of Advertising
i) Advertising is impersonal and cannot be as directly persuasive as the company sales
force.
ii) Advertising can only in most instances involve a one-way communication with the
audience and the audience may not feel that it has to pay attention or respond i. e no
immediate response.
iii) It can be very costly i.e. T.V advertising

8.2.2 Personal Selling

This is face to face or door to door selling of products/services. It is the personal presentation
by the firm’s sales force for the purpose of making sales and building customer relationships. It
includes sales presentations, demonstrations, trade shows etc.
This is the most effective tool at certain stages of the buying process, particularly in building
up buyer’s preferences, convictions and actions. Personal selling involves personal interaction
between two or more people, so each person can observe the other person’s needs and
characteristics and make a quick adjustment. It allows all manner of relationships to spring
up, ranging from a matter of selling to personal friendship. This enables the sales people to
establish long term relationships.
Advantages
i) The customers usually feel greater need to listen and respond, even if the response is a
polite “no thank you”.
ii) Encourages flexibility in operations.
iii) Products are tailor-made for the right customer group.
iv) The sale person can read the reactions of the customer through face to face
presentation or demonstration.
v) Encourages efficiency in dealing with the target market

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vi) Enhances relationship selling, increased profitability and increased customer loyalty.

Disadvantages
i) It involves high costs of employing, training, remunerating and even development of the
sales force.
ii) It is limited by company’s inability to get the right sales force to carry out the job (due to
this many retailers have abandoned the use of sales force and shifted to the self-service
stores).

8.2.3 Sales Promotion

It consists of a diverse collection of incentive-tools; mostly short-term designed to stimulate
quick and greater purchase of particular products/services. It offers an incentive to buy. It
includes samples, coupons, price-off, prices, patronage reward and point of purchase displays
among others. This includes a wide assortment of tools e.g. coupons, contests, cent-off deals,
premiums and other incentives.
The incentives attract consumer attention, offer strong incentives to purchase and can be used
to dramatize products offers and to boost sagging sales. Sales promotions invite and reward
quick response- whereas advertising says “buy our product” while sales promotion says “buy it
now”.
Sales promotions are often short lived.
8.2.4 Publicity
This is a non-personal form of demand stimulation and is not paid for by the person or
organization benefiting from it. It takes the form of favourable news presentation or some form
of public address.

8.2.5 Public Relations

A public is a group that has an actual or potential interest in or impact on a company’s ability
to achieve its objectives. Public relations (pr) include a variety of programs designed to produce
or protect a company’s image or its individual products. Main tools in public relation are
publications, events, news, speeches or services activities among others.
It involves building good relations with the company’s various publics by obtaining favourable
publicity, building up a good corporate image and handling or heading off unfavourable
rumours, stories and events.
Public relation is very believable and includes tools like, new stories, features and events. PR
can reach many prospects who may avoid sales people and advertisements. That is the
message gets to the people as news rather than as a sales-directed communication.

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It is still not a popular method of creating awareness for many marketers since they use it only
as an afterthought. Yet, a well thought out public relations campaign used with other
promotion mix can be very effective and economical.
NOTE: all in all, public relations could be said to be a planned effort by an organization to
influence some group’s attitude or opinion towards the organization. This may include publics
like government agencies or people living near the promoting organization etc
8.2.6 Direct Marketing
This is direct communication with carefully targeted individual consumers to obtain an
immediate response and create a lasting customer relationship. It includes telemarketing,
catalogs, faxes etc.
Forms of direct marketing include telemarketing, direct mail, electronic marketing and on-line
marketing among others.
Direct Marketing is:
i) Non-public: The message is normally addressed to a specific person.
ii) Immediate: Message can be prepared very quickly.
iii) Customized: Message can be tailored to appeal to a specific group of customers.
iv) Interactive: It allows a dialogue between the marketer and the customer and the
message can be altered depending on the consumer’s response.
Thus direct marketing is well suited to highly targeted marketing efforts and to building one to
one customer relationships.

NOTE: Communication goes beyond these specific promotion tools i.e. product’s design, its
price, shape, colour, packaging and the stores that sell it- all communicate something to the
buyers.

8.3 Factors affecting the Promotional Mix

The markets must decide what combinations of advertising, personal selling and other
promotional tools will make the most effective promotional program form the country.
The following factors should be taken into consideration when deciding the promotional mix:-
Funds Available
Capital Resources: A company with more funds will make more effective use of advertising
than an enterprise without ample funds.
Nature of the Market: Geographical scope- small or local markets can be reached through
personal selling whereas for a larger market, the marketers will put more emphasis on
advertising.
Types of Customers: Whether the company aims at industrial users, consumers or middle
men. What is the target market?

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Concentration of the Market: The fewer the buyers the more effective is personal selling.
More and widely sparced buyers will be reached more effectively using advertising
The Nature of the Product: Consumer products vs. industrial products require different
advertising strategies. Convenience goods that ate widely distributed would be advertised
through mass media since they do not need any special explanations. For the custom- made
products, one would use personal selling to reach out to the consumers. Industrial goods also
use a lot of personal selling.
Stages of the Product Life Cycle: Promotional strategies are influenced by life cycle stages of
a product which include:
i. Introductory stage: To educate and inform the customers about the product.
ii. Growth stage: To stimulate demand since competition has set in.
iii. Maturity stage: Persuade the customers to buy, provide information, and maintain the
market share of the product and to undertake reminder advertising.
iv. Decline: Sales decline and new products come up. The marketers may reduce the
advertising expenditure etc.
8.4 Effective Communication Program or Campaign
This involves 5 steps in developing an effective campaign:
Step 1: Identifying the Target Audience
Marketing communication starts with the identification of the specific group in mind. The
audience determines what will be said, how it will be said, when it will be said, where it will be
said and who will say it.
Step 2: Setting the Communication Objectives
These can be classified whether their aim is to inform, persuade or remind the customers
about the product. Therefore, the marketer has to find out the stage of communication where
the audience is in, in terms of buyer-readiness stage like, awareness, knowledge, liking,
preference, convenience and purchase. For example, if the objective of communication was to
create awareness about a new product, the TV and radio advertising would be appropriate.
Step 3: Choosing the Communication Message
The message to be designed by the communicator should get attention, hold interest arouse
desire and obtain action (THE AIDA model-suggests the qualities of a good message) in putting
the message together, the communicator has to know what to say and how to say it.
Communicators go through 4 steps to develop a creative strategy in trying to put a cross the
message to their audience.
i) Message generation: Major benefit the brand offers. Sources of ideas could be
employees, consumers, etc.
ii) Message evaluation and selection: Evaluation of alternative messages i.e. rating the
adverts in terms of desirability, exclusiveness (distinctive) and believability.

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iii) Message execution: How the message is put across e.g. depicting tone, lifestyle, mood
or image, musical, personality symbol, choice of words, etc.
iv) Social responsibility review: Advertisers must ensure that their “creative” advertising
does not overstep social and legal norms of society. They should communicate openly
and honestly with consumers.
Note: Due to abuse, public makers have developed a substantial body of laws and regulation to
ensure that companies:-
❖ Avoid deceptive advertising, i.e. false claims. Claiming that a product can do something
when it doesn’t.
❖ Avoid false demonstrations.
❖ Avoid bait-and switch advertising i.e. attracting buyers under false pretence
❖ To be socially responsible-advertisers must be careful not to offend any ethnic group and
always enhance the welfare of society e.g. non-irritant raid, gentle on your hands etc.
Step 4: Deciding the Communication Media
The communicator must decide on which channels to use i.e. the media
(Personal or impersonal) that reaches the audience most effectively, e.g. press, TV, magazines,
newspapers, internet, cinema among others. Advertisers must check the media cost
effectiveness and decide on the media timing i.e. when to put up an advert (which season).

Decisions regarding Media Availability

i) Media reach ability and accessibility: The question is which media would reach the
audience most effectively?
ii) What type of media should the marketer use? The choice should be between the
print (magazines, journal, newspaper, billboards etc) and electronic( radio, T.V internet,
cinema, etc) media.
iii) Cost of the media: Before making a choice on which media to use, the advertisers
must take into consideration the media cost effectiveness. That is, at what cost?
iv) Requirements of the message: The medium should fit the message. For example,
meat products, floor coverings, furniture etc are best presented in pictorial form and if
the advertiser can use the shortest message then billboards would be appropriate
(comfort of easier banking).
v) Media timing and location of buying decision: That is when to put an advert. The
medium should be one that can reach out to many prospective customers just when
they are about to make purchase decisions and at the places where they make them.
For example, billboards for the fuel products do well because the location is
appropriate- at the petrol stations. The grocery store adverts are also placed in

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 newspapers between Wednesdays, Thursdays, and Fridays just before the weekend
shopping.

Step 5: Deciding the Communication Budget

The main concern for the company is to decide on how much to spend on communicating
its offers to the target audience. It is argued that promotion e.g. advertising, increases cost
of products and the final price to the consumer goes up.
Factors to consider when setting an Advertising Budget
i) Type of media to be used: Personal or non personal.
ii) Stages in the product life cycle: New products receive larger advertising
expenditures to build awareness and gain consumer trial.
iii) Market share and consumer base: Higher market share brand usually requires
lower advertising budgets.
iv) Competition: Larger number of competitors, higher budgets on advertising in order
to be heard above the noise in the market.
v) Communication Frequency: The number of times the advert has to be repeated.
vi) Product sustainability: Brands in a commodity class e.g. cigarettes, beer, and soft
drink require heavy advertising to sustain them in the market.

8.5 Methods of setting the Advertising Budget

8.5.1 Affordable Method
Setting the promotion budget according to what the management thinks is affordable by the
organization. Smaller companies are notorious at using the arguing that their companies
cannot spend more than they have. This method of setting budgets completely ignores the
effects of promotion on sales and tends to place advertising last among spending priorities even
when it is critical to the success of the firm. This leads to an uncertain annual budget which
makes long-range planning difficult.
8.5.2 Percentage of Sales Method
This is a method that sets the promotional budget at a certain percentage of the current or
forecasted sales. It is simple to use and helps management think about the relationships
between promotion spending, selling price and profit per unit. But this method wrongly views
sales as the cause of promotion rather than as the result. The method does not provide any
basis for choosing a specific percentage except what has been done in the past or what
competitors are doing currently.

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8.5.3 Competitive Parity Method
This is setting a promotion budget that matches what the competitors are spending. That is the
marketers monitor the competitors’ advertising budget or get the industry promotion spending
estimates from publications or trade associations and then set their budget on the industry
average.
Advantages
i) The competitors’ budgets represent the collective wisdom of the industry.
ii) Spending what competitors spend helps prevent promotion wars.

Disadvantages
i) There are no grounds for believing that the competition has a better way of
understanding what a company should spend on advertising.
ii) There is no evidence that budget based on competitive parity prevent promotion
wars.
8.5.4 Objective and Task Method
This is the most logical way of setting an advertising budget i.e the company sets its promotion
budget based on what it wants to accomplish with promotion. This budgeting method entails:-
• Defining the specific promotion objectives.
• Determining the task needed to achieve these objectives.
• Estimating the costs of performing these tasks (the sum of these costs is the proposed
promotion budget).

8.6 Evaluation Communication Effectiveness

Measures the communication effect of the promotional mix elements (advertising) i.e.:
• How effective is the communication strategy?
• Are the audience reached and with what results?
• What is its potential effect on awareness, knowledge and preference?
Marketers can measure the effectiveness of advertising in the following ways:-
i) To compare past sales with past advertising expenditures Vis a Vis present sales and
present advertising expenditures.
ii) To carry out an experiment- to test the effect of various spending levels i.e. Coca-Cola
Company could vary its advertising expenditures in different markets and measure the
differences in the resulting sales levels (sometimes more complex experiments could be
used).
iii) Test their advertising campaigns to find out which adverts are better than others and
why.

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With effective evaluation, marketers want more proof whether advertising does pay i.e. they are
interested in knowing whether shillings spent on advertising are resulting in proportionately as
many sales as shillings spent on other activities.

The main concern for the marketers is whether the advert was seen and understood by the
audience, whether there is any part that can be remembered and whether the respondent
knows the sponsor i.e. the advertisements reach ability and with what results.
NOTE: it is difficult to measure the effectiveness of communication campaign (e.g. advertising)
due to the inability to identify the results of any given advertisement. Again most of the adverts
do not primarily aim at immediate sales results. For example some adverts are geared towards
informing the public about changes in the hours of work for an organization, building goodwill
and creating a better company image and not to increase profitability.

8.7 Promotion Mix Strategies

There are two basic promotional mix strategies
• push strategy
• pull strategy
8.7.1 Push Strategy
This is a promotion strategy that calls for using the sales force and trade promotion to push
the product or service through the distribution channels to the final consumers. That is the
marketers or producers direct their marketing efforts (primarily personal selling and trade
promotions) towards channel members to induce them to carry the product and to promote it
to the final consumers
8.7.2 Pull Strategy
This is a promotion strategy that calls for spending a lot on advertising and consumer
promotions to build consumer demand, which pulls the product or service through the
channels. That is the marketers direct their marketing efforts (primarily advertising and
consumer promotions) towards the final consumers to induce them to buy the product.

8.8 Conclusion
The combination of the promotional mix to be used will vary according to the nature of the
markets, the characteristics of the target audience and the features of the product. That is
there may be no standard promotional mix ideal for every situation. The promotional mixes are
complimentary and not competitive and there are considerable gains from developing a
coherent and well balanced promotional mix.

Class notes: BBM212 SEPT-DECEMBER 2018.

9.0 MARKETING INFORMATION SYSTEM
9.1 Importance
9.2 Components (Internal records, Marketing intelligence, Marketing research and
Marketing Decision Support Systems)
9.3 Further focus on Marketing Research process

MARKETING INFORMATON SYSTEMS

Introduction

This chapter opens with a wide-ranging discussion on the functions of management,

the various types and levels of decision that marketing managers must make. This
then comprises the first half of the chapter whilst the second part deals with the main
components of a marketing information system. Internal reporting systems, marketing
research systems, marketing intelligence systems and analytical model banks are all
discussed.

The Functions of Management

Clearly, information systems that claim to support managers cannot be built unless
one understands what managers do and how they do it. The classical model of what
managers do, espoused by writers in the 1920's, such as Henry Fayol, whilst
intuitively attractive in itself, is of limited value as an aid to information system
design. The classical model identifies the following 5 functions as the parameters of
what managers do:

1 Planning
2 Organizing
3 Coordinating
4 Influencing
5 Controlling

Such a model emphasizes what managers do, but not how they do it, or why. More
recently, the stress has been placed upon the behavioral aspects of management
decision-making. Behavioral models are based on empirical evidence showing that
managers are less systematic, less reflective, more reactive and less well organized
than the classical model projects managers to be. For instance, behavioral models
describe six managerial characteristics:

• High volume, high speed work

• Variety, fragmentation, brevity
• Issue preference current, ad hoc, specific
• Complex web of interactions, contacts
• Strong preference for verbal media.

Such behavioral models stress that managers’ work at an unrelenting pace and at a
high level of intensity. This is just as true for managers operating in the developing
world as in the developed world. The nature of the pressures may be different but
there is no evidence that they are any less intense. The model also emphasizes that

Class notes: BBM212 SEPT-DECEMBER 2018.

the activities of managers is characterized by variety, fragmentation and brevity. There
is simply not enough time for managers to get deeply involved in a wide range of
issues. The attention of managers increases rapidly from one issue to another, with
very little pattern. A problem occurs and all other matters must be dropped until it is
solved. Research suggests that a manager's day is characterized by a large number of
tasks with only small periods of time devoted to each individual task.

Managers prefer speculation, hearsay, gossip in brief, current, up-to-date, although

uncertain information. Historical, certain, routine information receives less attention.
Managers want to work on issues that are current, specific and ad hoc.

Managers are involved in a complex and diverse web of contacts that together act as
an information system. They converse with customers, competitors, colleagues, peers,
secretaries, government officials, and so forth. In one sense, managers operate a
network of contacts throughout the organization and the environment.

Several studies have found that managers prefer verbal forms of communication to
written forms. Verbal media are perceived to offer greater flexibility, require less effort
and bring a faster response. Communication is the work of the manager, and he or
she uses whatever tools are available to be an effective communicator.

Despite the flood of work, the numerous deadlines, and the random order of crises, it
has generally been found that successful managers appear to be able to control their
own affairs. To some extent, high-level managers are at the mercy of their
subordinates, who bring to their attention crises and activities that must be attended
to immediately. Nevertheless, successful managers are those who can control the
activities that they choose to get involved in on a day-to-day basis. By developing their
own long-term commitments, their own information channels, and their own
networks, senior managers can control their personal agendas. Less successful
managers tend to be overwhelmed by problems brought to them by subordinates.

Managerial Roles

Mintzberg suggests that managerial activities fall into three categories: interpersonal,
information processing and decision-making. An important interpersonal role is that of
figurehead for the organization. Second, a manager acts as a leader, attempting to
motivate subordinates. Lastly, managers act as a liaison between various levels of the
organization and, within each level, among levels of the management team.

A second set of managerial roles, termed as informational roles, can be identified.

Managers act as the nerve center for the organization, receiving the latest, most
concrete, most up-to-date information and redistributing it to those who need to know.

A more familiar set of managerial roles is that of decisional roles. Managers act as
entrepreneurs by initiating new kinds of activities; they handle disturbances arising in
the organization; they allocate resources where they are needed in the organization;
and they mediate between groups in conflict within the organization.

Class notes: BBM212 SEPT-DECEMBER 2018.

In the area of interpersonal roles, information systems are extremely limited and make
only indirect contributions, acting largely as a communications aid in some of the
newer office automation and communication-oriented applications. These systems
make a much larger contribution in the field of informational roles; large-scale MIS
systems, office systems, and professional workstations that can enhance a manager's
presentation of information are significant. In the area of decision-making, only
recently have decision support systems and microcomputer-based systems begun to
make important contributions.

While information systems have made great contributions to organizations, until

recently these contributions have been confined to narrow, transaction processing
areas. Much work needs to be done in broadening the impact of systems on
professional and managerial life.

Decision Making

Decision-making is often seen as the center of what managers do, something that
engages most of a manager’s time. It is one of the areas that information systems have
sought most of all to affect (with mixed success). Decision-making can be divided into
three types: strategic, management control and operations control.

Strategic decision-making: This level of decision-making is concerned with deciding

on the objectives, resources and policies of the organization. A major problem at this
level of decision-making is predicting the future of the organization and its
environment, and matching the characteristics of the organization to the environment.
This process generally involves a small group of high-level managers who deal with
very complex, non-routine problems.

For example, some years ago, a medium-sized food manufacturer in an East African
country faced strategic decisions concerning its range of pasta products. These
products constituted a sizeable proportion of the company's sales turnover. However,
the company was suffering recurrent problems with the poor quality of durum wheat it
was able to obtain resulting in a finished product that was too brittle. Moreover, unit
costs were shooting up due to increasingly frequent breakdowns in the ageing
equipment used in pasta production. The company faced the decision whether to
make a very large investment in new machinery or to accept the offer of another
manufacturer of pasta products, in a neighboring country, that it should supply the
various pasta products and the local company put its own brand name on the packs.
The decision is strategic since the decision has implications for the resource base of
the enterprise, i.e. its capital equipment, its work force, its technological base etc. The
implications of strategic decisions extend over many years, often as much as ten to
fifteen years.

Management control decisions: Such decisions are concerned with how efficiently
and effectively resources are utilized and how well operational units are performing.
Management control involves close interaction with those who are carrying out the
tasks of the organization; it takes place within the context of broad policies and
objectives set out by strategic planners.

Class notes: BBM212 SEPT-DECEMBER 2018.

An example might be where a transporter of agricultural products observes that
his/her profits are declining due to a decline in the capacity utilization of his/her two
trucks. The manager (in this case the owner) has to decide between several alternative
courses of action, including: selling off the trucks, increasing promotional activity in
an attempt to sell the spare carrying capacity, increasing unit carrying charges to
cover the deficit, or seeking to switch to carrying products or produce with a higher
unit value where the returns to transport costs may be correspondingly higher.
Management control decisions are more tactical than strategic.

Operational control decisions: These involve making decisions about carrying out
the “specific tasks set forth by strategic planners and management. Determining
which units or individuals in the organization will carry out the task, establishing
criteria of completion and resource utilization, evaluating outputs - all of these tasks
involve decisions about operational control.

The focus here is on how the enterprises should respond to day-to-day changes in the
business environment. In particular, this type of decision making focuses on
adaptation of the marketing mix, e.g. how should the firm respond to an increase in
the size of a competitor's sales force? Should the product line be extended? Should
distributors who sell below a given sales volume be serviced through wholesalers
rather than directly, and so on?

Within each of these levels, decision-making can be classified as either structured or

unstructured. Unstructured decisions are those in which the decision maker must
provide insights into the problem definition. They are novel, important, and non-
routine, and there is no well-understood procedure for making them. In contrast,
structured decisions are repetitive, routine, and involve a definite procedure for
handling them so that they do not have to be treated each time as if they were new.

Structured and unstructured problem solving occurs at all levels of management. In

the past, most of the success in most information systems came in dealing with
structured, operational, and management control decisions. However, in more recent
times, exciting applications are occurring in the management and strategic planning
areas, where problems are either semi-structured or are totally unstructured.

Making decisions is not a single event but a series of activities taking place over time.
Suppose, for example, that the Operations Manager for the National Milling
Corporation is faced with a decision as to whether to establish buying points in rural
locations for the grain crop. It soon becomes apparent that the decisions are likely to
be made over a period of time, have several influences, use many sources of
information and have to go through several stages. It is worth considering the question
of how, if at all, information systems could assist in making such a decision. To arrive
at some answer, it is helpful to break down decision making into its component parts.

The literature has described four stages in decision-making: intelligence, design, choice
and implementation. That is, problems have to be perceived and understood; once
perceived solutions must be designed; once solutions are designed, choices have to be
made about a particular solution; finally, the solution has to be implemented.

Class notes: BBM212 SEPT-DECEMBER 2018.

Intelligence involves identifying the problems in the organization: why and where they
occur with what effects. This broad set of information gathering activities is required to
inform managers how well the organization is performing and where problems exist.
Management information systems that deliver a wide variety of detailed information
can be useful, especially if they are designed to report exceptions. For instance,
consider a commercial organization marketing a large number of different products
and product variations. Management will want to know, at frequent intervals, whether
sales targets are being achieved. Ideally, the information system will report only those
products/product variations, which are performing substantially above or below
target.

Designing many possible solutions to the problems is the second phase of decision-
making. This phase may require more intelligence to decide if a particular solution is
appropriate. Here, more carefully specified and directed information activities and
capabilities focused on specific designs are required.

Choosing among alternative solutions is the third step in the decision making process.
Here a manager needs an information system, which can estimate the costs,
opportunities and consequences of each alternative problem solution. The information
system required at this stage is likely to be fairly complex, possibly also fairly large,
because of the detailed analytic models required to calculate the outcomes of the
various alternatives. Of course, human beings are used to making such calculations
for themselves, but without the aid of a formal information system, we rely upon
generalization and/or intuition.

Implementing is the final stage in the decision making process. Here, managers can
install a reporting system that delivers routine reports on the progress of a specific
solution, some of the difficulties that arise, resource constraints, and possible
remedial actions. Figure 4.1 illustrates the stages in decision-making and the general
type of information required at each stage.

Figure 4.1 - Stages in the decision making process

Stage of Decision Making Information Requirement

1 Intelligence Exception reporting

2 Design Simulation prototype

3 Choice What-if simulation

4 Implementation Graphics, charts

Class notes: BBM212 SEPT-DECEMBER 2018.

In practice, the stages of decision-making do not necessarily follow a linear path from
intelligence to design, choice and implementation. Consider again the problem of
balancing the costs and benefits of establishing local buying points for the Milling
Corporation of Kenya. At any point in the decision making process it may be necessary
to loop back to a previous stage. For example, one may have reached stage 3 and all
but decided that having considered the alternatives of setting up no local buying
points, local buying points in all provinces, districts or divisions, the government
decides to increase the amounts held in the strategic grain reserve. This could cause
the parastatal to return to stage 2 and reassess the alternatives. Another scenario
would be that having implemented a decision one quickly receives feedback indicating
that it is not proving effective. Again, the decision maker may have to repeat the
design and/or choice stage(s).

Thus, it can be seen that information system designers have to take into account the
needs of managers at each stage of the decision making process. Each stage has its
own requirements.

11.0 GLOBAL MARKETING

11.1 International Marketing Environment
11.2 Factors to consider

INTRODUCTION TO INTERNATIONAL MARKETING

Definition of International Marketing
International marketing is defined as finding and satisfying global customer needs
better than competition both domestic and international and of coordinating market
activities within the constraints of global environment.
Cateora (1993) defines international marketing as the performance of business
activities that direct the flow of a company’s goods and services to consumers or users
in more than one nation.
The American Marketing Association defines International Marketing as
multinational process of planning and executing the conception, pricing, promotion
and distribution of ideas, goods and services to create exchanges that satisfy
individual and organizational objectives.
Scope of International Marketing
The scope of international marketing is to have a borderless world like the
multinational companies e.g. coca cola, Pepsi, unilever etc.
A central issue in international marketing is how to tailor the international
marketing concept, to fit a particular product or business.
International firms have products and market mix elements which are both local
and international in nature.
Difference between International and Domestic Marketing
Striking difference lies in the environment in which the two take place. Some
important points of the difference include:
1. Sovereign political entities -Each country is a sovereign political entity and they
impose several restrictions for import and export of goods and services including
tariffs, quotas, exchange control, total ban etc.
2. Different legal systems - The legal systems differ from one country to another.
3. Different monetary system’s – different countries have their own monetary
systems and currencies.

Class notes: BBM212 SEPT-DECEMBER 2018.

 4. Lower mobility or factors of production – Factor mobility between countries is
low for factors such as land, labour and capital.
5. Differences in market characteristics - Different markets have different cultures,
language, population, physical environment etc.
6. Difference in procedures and documentation - the laws of countries and customs
of trade in each country demand different procedures and documentation.

Similarities between International Marketing and Domestic Marketing

1. Both aim at maximizing the firm’s profitability.
2. There is a managerial process involved.
3. Forces of demand and supply apply in both markets.
4. In both markets, consumers have needs and seek satisfaction.
5. There is competition in both cases.
6. Market research is a must for firm to thrive in either market.
7. Similar marketing techniques apply - the 4P’s of the marketing mix apply in
both markets.

Why Go International?
1. Saturation of domestic market

Markets for a variety of goods are becoming saturated far faster than new markets
are created.
Thus companies in many industries must develop new markets to continue to
generate profits.
International markets especially those where market saturation is a distant threat
provide an attractive alternative eg cigarette sales have stagnated in the US and
Europe, the third world countries offer rich markets.
2. Product maturity

The product life cycle stage at home may be one of maturity, whereas there may be
a new embryonic market abroad enabling the product to start a new life cycle from
introduction where quantities available are low but the price commended is high eg
cars from Japan.
3. Competition

Competition may be less intense abroad than at home. Other countries may for
example have cheaper raw materials or labor costs, or they may have gained
experience curve costs advantages through economies of mass production.
4. Excess capacity utilization

A firm could be having machinery and factory facilities that are not currently in
use following discovery of a foreign market for its goods, such excess capacity can be
utilized immediately.
5. Excess stock

Firms with short product life cycle are constantly trying to rid themselves of
outdated products without spoiling their domestic markets eg electronic
manufacturers dump their surpluses in markets with lagging product life cycle. 3

Class notes: BBM212 SEPT-DECEMBER 2018.

 6. Risk spreading

Some companies prefer not to have all their eggs in one basket. To spread risk,
they can either diversify their range of products or diversify geographically.
7. Managerial urge

Managerial urge reflect the strategic drive, desire and enthusiasm of management
towards exporting and other types of international marketing.
8. Change agents

Government agencies, industrial trade associations, chamber of commerce and

other organizations are major promoters of export activities. Activities of such firms in
foreign destination may provide information regarding market opportunities in foreign
countries hence stimulating firms to go abroad.
Dilemma of Going International (A Source of Good and Evil)
1. They interfere politically with affairs of host nations.
2. Destroy local jobs.
3. By exporting its knowhow and national technology they destroy home countries
technology.
4. Destroy local culture.

Benefits of International Marketing

1. Diversification leads to diversification of a company’s risks.
2. Employment and placement.
3. Raises the standard of living/style.
4. Improvement on the market process.
5. Sales promotion.

Process of Internationalization
Certain firms start from the onset as international firms; others begin as domestic
firms concentrating on their own domestic market before shifting focus to
international markets. According to Andersen, there are 4 steps in international
market:
i) Know regular export activities
ii) Export through independent representatives (agents)
iii) Establishment of an overseas sales subsidiary
iv) Overseas production/ manufacturing.
4

Other Internationalization process

Non-exporters
Exporters
Sporadic exporters
Regular exporters

Class notes: BBM212 SEPT-DECEMBER 2018.

 INTERNATIONAL MARKETING ORIENTATIONS
Some firms are very involved with international marketing while others show very little
interest or motivation. International marketing orientation is the attitude that a firm
has towards the international market. These different attitudes towards international
marketing activities are called international orientation.
There are 4 international orientations;
1. Ethnocentric Orientation
2. Polycentric Orientation
3. Regiocentric Orientation
4. Geocentric Orientation

1. Ethnocentric Orientation (home-country orientation)

A person who assumes that his home country is superior compared to the rest of the
world is said to have an ethnocentric orientation. The ethnocentric firm assumes that
the products and practices that succeed in the home country will because of their
demonstrated superiority be successful anywhere. 5

Major features:
Views foreign market as a place to dispose of excess output.
Perceives foreign environment and its opportunities as not different from
domestic market.
Even if the needs and wants of the international markets differ from those of the
home country, such needs are ignored at by headquarters
Perceives foreign operations are viewed as secondary or subordinate to domestic
ones.
The firm sees no need for systematic marketing research outside the home
market.
No major modifications are made to the product before exporting them abroad.
The ethnocentric firm has a centralized marketing management
Marketing strategies similar to domestic markets. Hence the ethnocentric firm
doing business at homes only are referred to as domestic companies. Ethnocentric
firms that do business outside the home country are described as international
companies.

The main advantage of this approach is the it is relatively simple, rapid and
economical to implement in overseas market.
The main limitation to this approach is that it limits the long term success of a firm
because it does not involve any sort of comparative analysis.
2. Polycentric Orientation (host-country orientation)

The polycentric orientation is the opposite of ethnocentrism. The term polycentric

describes management beliefs or assumption that each country in which a company
does business is unique. A polycentric firm identifies the differences in each market.
This assumption lays the ground work for each subsidiary to develop its own unique
business and marketing strategies in order to succeed. The term multinational
company is often used to describe such a structure.
Major features:
Each market where it operates is treated as if it were unique.

Class notes: BBM212 SEPT-DECEMBER 2018.

 Each market has its own marketing strategy and objectives based on firms’
knowledge of local needs.
Product modified to meet local market.
Price and promotion established by each subsidiary.
Local nationals make up the sales force.
The polycentric firm has a decentralized marketing management

The main disadvantage of this approach is that it is unprofitable in the long run
due to duplication of effort and strategies. A remedy is to adopt a cluster of markets
approach where a group of market (countries) exhibit similar market characteristics.
An approach called regiocentrism.
3. Regiocentric and Geocentric Orientation (World Orientation)

In a company with a Regiocentric orientation, management views regions as unique

and seeks to develop an integrated regional strategy.
A company with a geocentric orientation views the world as a single market and
tends to use both similarities and differences in various markets to develop a world
market strategy. A firm whose management has a regiocentric or geocentric
orientation is also known as a global or transnational company.

Major Features:
Firm attempts to develop uniform global marketing strategies that is fully
responsive to local needs and wants.
Identifies homogenous international demand segments that can be targeted by a
standard product.
The geocentric firm has an integrated marketing management approach on a
regional and global scale.

This approach is capable of achieving rapid worldwide distribution of a product as

well as attaining low production cost partly due to economies of scale.
The main challenge with this approach is that its success depends on careful and
continuous global market research which is expensive and time consuming.

Class notes: BBM212 SEPT-DECEMBER 2018.

 12.0 CONTEMPORARY ISSUES IN MARKETING
12.1 Ethics in Marketing
12.2 E-Marketing

MARKETING ETHICS AND SOCIAL RESPONSIBLILTY

Introduction

Some critics argue that the money-making motive of some marketers has encouraged
many to cross the line in terms of ethical business behavior. Ethics is concerned with
what is right and what is wrong. Many people assume that only actions that violate
laws are considered unethical. While it is true that illegal activity is also unethical, a
business activity can be unethical even though no laws are violated. For instance,
some consider it unethical for marketing companies to aggressively promote unhealthy
foods to children though such promotional practices are generally not viewed as
illegal.

Understanding Ethical Marketing behavior

The relationship among factors that influence ethical behavior can be shown in a
framework in which:

Societal culture and norms

Affect

Business culture and industry practices

Affect

Corporate culture and expectation

All of which affect and are

Affected By

Personal moral philosophy and ethical behavior.

Figure 15.1: A framework for understanding Ethical behavior

Class notes: BBM212 SEPT-DECEMBER 2018.

Societal Culture and Norms

Culture refers to the set of values, ideas, and attitudes of a homogeneous group of
people that are transmitted from one generation to the next. Culture also serves as a
socializing force that dictates what is morally right and just. This means that moral
standards are relative to particular societies, often reflecting the laws and regulations
that affect social and economic behavior, including marketing practices. It is common
to observe different ethical views in different countries. Societal values affect business
practices regarding the use of another’s ideas, copyright, trademark, or patent. These
are viewed as intellectual property, and unauthorized use is deemed unethical and
illegal in a number of countries although it is not the case everywhere.

Business Culture and Industry Practices

Business cultures comprise the following:
i) The effective rules of the game
ii) The boundaries between competitive and unethical behavior
iii) The codes of conduct in business dealings.

They affect ethical conduct in the exchange relationship between sellers and buyers
and also in the competitive behavior among sellers.

Ethics of Exchange
Ethical exchanges between buyer and seller should result in both parties being better
off after a transaction. Before the 1960s, the legal concept of caveat emptor–let the
buyer beware was pervasive in the American business culture.

Ethical/Legal Framework in Marketing

• Often, society may deem certain behavior to be unethical but laws may not
forbid it. Ethics deal with personal moral principles and values while Laws are
society's values and standards that are enforceable in the courts. There are
numerous situations where judgment plays a large role in defining ethical and
legal boundaries. Actions that are technically legal could be viewed as unethical
just as actions considered to be ethical may not be seen as legal. Figure 15.2
below depicts the scenario well.

Class notes: BBM212 SEPT-DECEMBER 2018.

 Figure 15.2: Classifying Marketing Decisions

Practices that may be unethical but laws do not forbid include:

a) Raising prices on scarce products after a natural disaster such as floods or
El Nino
b) Not having adequate stock when a sale is advertised
c) Charging high prices in low income areas such as slums or in North Eastern
Kenya because consumers there do not have the transportation mobility to
shop out of their neighborhoods
d) Selling alcohol and tobacco products to the sickly
e) Having a salesperson pose as a market researcher when engaged in
telemarketing
f) Defaming competitors
g) Selling refurbished merchandise as new
h) Exerting pressuring on employees to push high profit items to shoppers,
even if they are not best for them
i) Selling information from a customer database
Often times the line between what is considered ethical and unethical is difficult to
distinguish since what is right and wrong differs depending on such factors as
nationality, culture, and even industry. For example, many websites offer users
access at no monetary charge to their content (e.g., articles, videos, audio clips, etc.)
but do so only if users register and provide contact information including email
addresses. Some of these sites then automatically add registrants to promotional
email mailing lists. Some view the practice of automatic “opt-in” to a mailing list as
being unethical since customers do not request it and are forced to take additional
action to be removed from the list (“opt-out”). However, many marketers see no ethical
issue with this practice and simply view adding registered users to an email list as
part of the “cost” to customers for accessing material.

Class notes: BBM212 SEPT-DECEMBER 2018.

Marketing Code of Ethics

The call for marketers to become more responsible for their actions has led to the
development of a code of ethics by many companies and professional organizations.

A company code of ethics includes extensive coverage of how business is conducted by

members of an organization. For instance, Yahoo! lays out an extensive list of what is
expected of their employees in their document
http://yahoo.client.shareholder.com/conduct.cfm. Among the issues covered are:

• Business Relationships (“must never take unfair advantage of others through

manipulation, concealment, abuse of privileged information, misrepresentation
of material facts or any other unfair dealing practice”)
• Offering Gifts to Clients (“may not furnish or offer to furnish any gift that is of
more than token value or that goes beyond the common courtesies”)
• Receiving Gifts From Clients (“must never request or ask for gifts,
entertainment or any other business courtesies”)
• Business Communication (“should take care to avoid exaggeration, colorful
language, guesswork, legal conclusions and derogatory remarks or
characterizations of people and other companies”)

Marketers often join professional organizations for the purpose of associating with
others who share similar interests. These organizations include industry associations,
whose membership is mostly limited to those who work within a particular industry,
and professional services associations, whose membership consists of those who share
similar job responsibilities. Marketers joining these organizations often find that a
code of ethics has been developed that is intended to be followed by all organization
members. For example, the Canadian Marketing Association lays out rules for its
membership, which includes marketers from many for-profits and not-for-profit
organizations, in its Code of Ethics and Standards and Practices. The Code discusses
such issues as:

1) Accuracy of Representation of Products (“must accurately and fairly

describe the product or service offered”)
2) Support of Claims Made About Products (“must be able to substantiate
the basis for any performance claim or comparison“)
3) Acceptability for Using the Word “Free” (“Products or services offered
without cost or obligation”)
4) Guidelines for Advertising Which Compares One Product to Another
("must be factual, verifiable and not misleading”)

Marketing Society of Kenya (MSK) is in its final stages of developing such Code of
Ethics and will be a regional pioneer on this.

Class notes: BBM212 SEPT-DECEMBER 2018.

Strategy and ethics in marketing environment
Today’s marketing environment is characterized by intense competition and rivalry,
less loyal customers whose tastes and preferences keep changing, high promotion
costs, new competing products, new government regulations and changing
technology. Complexity in the environment has made the level of business ethics to
decline in the past few years. Next we look at specific areas of marketing where there
has been a lot of detraction from ethics

Ethics and the management of pricing function

Pricing is perhaps the most difficult of all the areas of marketing to examine from an
ethical view point because of the complexity of the price variable. There is an
expansive realm of ethical issues in pricing; issues may be raised at all levels of
distribution channel, across different market structures and competitive situations
and across industry types. The following are some of the more important areas of
ethical issues in pricing.

1. Setting a price that meets company objectives while not taking the advantage of the
customers
Generally speaking, new products should be priced to gain experience and market
share, which if done correctly, should meet stated company objectives in terms of
profit and return on investment. As market share increases, low costs should be the
result. If a skimming price strategy is initially used, is the firm under moral obligation
to lower prices without a clear market-oriented reason for doing so (such as
competitive entry, competitive price move etc)? It is not possible to make a judgment
on this question. The question is raised to point out that if profit goals are
overemphasized, line management may perceive that profit should be placed above
ethical considerations. It is hoped that competitive forces will keep prices and demand
for the company products or products on an even ground.

2. Altering product quality without changing price

Product quality usually determine price, as buyers are reluctant to pay for
unnecessary product quality. An over anxious line manager may be tempted to reduce
quality standards as part of value analysis effort.
Assume that a large equipment manufacturer initiates a major cost reduction effort,
substituting plastic for steel in several sub-assemblies. Though realizing that the life of
the equipment may drop slightly, the manufacturer does not reduce the price of the
finished product to reflect the cost savings. It must also be assumed that price
exhibits on inelastic demand curve in this situation. Is this ethical, should the
possibility of a shortened useful life be brought to the attention of prospective buyers?
Will this decision depend on competitive forces, the stage in the PLC, the profitability
of the product line, or pressure exerted by top management for increased profitability?
The reality is that it is not easy to produce ready answers to such questions.

3. Practicing price discrimination with smaller accounts

Although government laws makes it unlawful to discriminate between commodities of
like grade and quality, and prohibits unfair competition, it would be naïve enough for
someone to think that price discrimination against smaller accounts does not happen
occasionally with some companies. In an effort to please, or because of a long-standing
professional (or even personal) relationship, in addition to both internal and external

Class notes: BBM212 SEPT-DECEMBER 2018.

pressures, the marketer will be tempted to treat some customers, better than others
when price is an issue. Such marketer will be shocked to learn of a potential violation
of law and in all probability is doing what he or she thinks is best for the company,
given the realities of the situation. Such an attitude raises serious ethical and legal
questions and issues.

4. Price fixing
A way of controlling competition is for a small group of producers to collude for their
common good by agreeing on the prices to charge. This practice, known as price fixing,
is illegal because it undermines the competitive system to the detriment of the buyer;
it is also immoral. If firms join together and use their combined power to fix prices, to
drive out competitors; or to earn monopolistic profits at the expense of not only the
business buyer but also of the ultimate consumer, the market ceases to be
competitive, the result is a decline in, or restriction of, a buyer’s freedom to make
economic choices. Criminal penalties for those convicted of collusive price activity may
include a fine, a prison term or both. In view of the potential fines, jail terms, legal
fees, damages and loss of goodwill that may result from this practice, there should not
be valid justification for a firm to engage in this activity.

5. Obtaining information on a competitor’s price quotation in order to re-quote or re-bid

When competitive bidding is used, requests for bids are usually sent to many potential
vendors, depending on the monetary size of the purchase. Bidding is a morally
justifiable procedure, provided it is fair. However, keeping it fair is not always an easy
task. If the bidding process is top secret, then violation of secrecy by any of the parties
in the process violates the fairness condition of the bidding process. The leaking of
information to other potential suppliers is unfair, immoral and unethical, and could be
the result of bribery or offers of a cash kickback. Bidding, although used fairly in the
vast majority of cases, is open to abuses and must be controlled if it is to be kept fair.

6. Reciprocity
Many business buyers often select suppliers who also buy from them. An example of
reciprocity would be a packaging manufacturer who buys needed chemicals from a
chemical company that is buying a considerable amount of the packaging firm’s
product. Reciprocity is not illegal but it lessens competition substantially. Reciprocity
is forbidden if it eliminates competition in an unfair manner. As long as the buyer can
show that competitive prices, quality and service are supplied, then reciprocity
probably just makes good business sense. However, if these conditions are not met,
then the question of ethical standards must be addressed.

Ethics and management of the sale force

As key links between organizations and the buyer, sales people encounter situations
that can lead to unethical conduct. Ethical issues confronting sales personnel can be
categorized into two broad categories: (i) Ethics in dealing with customers (ii) Ethics in
dealing with employers.

i) Ethics in dealing with customers

Sales people occasionally find themselves in the position where in they are tempted to
lower their ethical standards when dealing with some customers; sales people may
compromise their standards because a customer or competitor is engaged in an
unethical strategy. A half-truth or mis-representation, a subtle demand for a gift or

Class notes: BBM212 SEPT-DECEMBER 2018.

extra-ordinary entertainment, or some other unethical trick might tempt the
salesperson to relax standards, especially when large order is at stake. The major
problem areas involved are bribes, gifts, entertainment and reciprocity.
(a) Bribes
The issue of bribes, although widespread and considered very acceptable behavior
within some cultures, should be refused tactfully, thus allowing salespeople to act
in the best interests of their employers and in fairness to all customers. Bribery is
not only unethical but can also be illegal. In addition, it is often difficult to
distinguish between a bribe, a gift to show appreciation, and a reasonable
commission for the services rendered, as bribery today is done in a more
sophisticated manner than in the past and in less easy to identify. Bribery distorts
the operation of fair bargaining, and salespeople should resist efforts for bribes
from customers or buying centre members who might want to engage in such
activity.
(b) Gifts
Accepting or giving gifts may or may not be ethical, but the practice of gift giving is
under careful scrutiny within many business firms. If the giving of gift is done as a
condition of doing business (subtle or otherwise), then clearly the act is immoral
and unethical. Many firms have stopped the practice of giving Christmas gifts to
customers, offering instead to contribute to a customer’s favourite charity. Some
common sense and social intelligence should be good guides in keeping the selling
firm within ethical boundaries.
(c) Entertainment
The entertainment of customers and potential customers though quite common
and even expected today, too can raise ethical questions. (E.g. is taking a customer
to a lunch, reasonable and expected?) Many times customers resent attempts to
influence them unduly and find efforts to obligate them to buy from a particular
seller quite offensive. As a general rule, lavish entertainment can become unethical
if attempt is to substitute it for good selling techniques.
(d) Reciprocity
This phenomenon occurs when a buyer gives preference to a supplier who is
also a customer. It is usually found in industries in which products are
homogeneous and/or there is not a high degree of price sensitivity. The buyer of
business goods thus has the opportunity to use purchases to generate sales by
a threat, over or implied, or to withdraw patronage unless it is reciprocated.
This practice has ethical and perhaps even legal implications.

ii) Ethics in dealing with employers

In dealing with their own employers, salespeople encounter situations which may lead
to unethical conduct. The major problem areas involved are moonlighting,
relationships with fellow salespeople and expense accounts.
a) Moonlighting
Salespeople who waste or misuses time (especially those who work on a straight
salary compensation plan) are in a sense stealing profits from the employing
company. The holding of more than one job, moonlighting, may be construed as
misuse of company’s time, and it therefore raises some potential ethical and
moral questions. Employers have a right to expect full time work from
salespeople employed to sell their products, and those who hold other jobs or
operate site business may violate the principal of time accountability. A
salesperson who handles another product line (even a non-competitive product

Class notes: BBM212 SEPT-DECEMBER 2018.

 line) is engaged in the unethical practice of kiting. The key here is disclosure –
that is, informing the employer that extra hours are being spent on doing
something else. If the employer agrees that the salesperson may engage in other
work, or may carry the line of another company, then the salesperson’s
obligations with regard to ethical behavior have been satisfied.
b) Changing jobs
This is another area in which salespeople face ethical responsibility. An active
effort by sales managers to “pirate” salespeople away from competitors is likely
to be seen as unethical. Companies invest considerable money in training
salespeople in addition to the fact that over a period of time they built up
customer knowledge and goodwill of which they may take advantage if they
changed jobs and accepted the position with a competitor. Job switchers have
generally had access to confidential information and perhaps to competitive
secrets. If such factors are used as a strategy to gain new employment, this
practice would be considered unethical of both the prospective employer and
recruiting sales manager.
c) Expenses accounts
Most companies provide the sales force with sufficient travel and entertainment
expense money to cover all justified expenses of doing business, and it is the
responsibility to use the money effectively. Expenses accounts present
temptations and are the most frequent area for ethical abuse within the sales
organization. The fine line the sales manager must walk with regard to expense
account control can be trying. A tight control might cause the salesperson to
curtail travel and necessary entertainment to the detriment of the company,
while loose control will result in selling expense ratios higher than they should
be.

d) Contests
They are designed to motivate sales representatives to make more sales of all
products, or to make more sales of specific products with a product line. The
pressure to win can result in the “stockpiling” of orders until the contests
begins, the selling of unneeded products to “friends” for later return for credit,
the overselling unneeded products to good customers. All these practices are
easy to rationalize and all are unethical.

Ethics and Advertising

The use and abuse of advertising tools and techniques have been up for debate for a
long time. Indeed the manager overseeing the firm’s promotion strategy has a primary
responsibility to create profitable sales for the company and due responsibility to the
customers. Three issues are however central to an ethical discussion of advertising.
They include: advocacy, accuracy and acquisitiveness.

1. Advocacy
Advertising by its very nature, tries to persuade the audience to do something. Thus it
is not objective or neutral. This fact disturbs critics who think that advertisement
should be objective, informative and neutral. They want advertisement to provide
information and stop there.

Class notes: BBM212 SEPT-DECEMBER 2018.

 2. Accuracy
Beyond the easily ascertainable claim in an advertisement message, such as:
• Does the advertised car have air conditioning, a digital radio/CD player and
is it available in different colors?
• Will the automobile make me an envy of my peers?
• Will the Dettol soap kill 99% of the germs?
• Is Rina cooking oil cholesterol free?
The advertising messages content should therefore, discriminate between the
intelligent and the illiterate. The audience conceptualize the advertisement messages
differently and so are the children and the teenagers (e.g. buying a car or drinking a
coke does not make a person new or great!!) But advertising messages want to imply
this.

3. Acquisitiveness (amassing wealth)

Some critics maintain that advertisement is a symbol of our society’s preoccupation
with accumulating material objects. Because we are continually exposed to an array of
changing, newer and better products, critics claim that we are “corrupted” into
thinking or believing that we must have these products. However advertisement gives
us choices and incentives for which we continue to strive in order to satisfy our needs.
Thus advertisement simply tells consumers about goods and services that they
implicitly demand and the ultimate decision is made by the consumer.

The ethical dilemma in advertising

Although advertisers can seek help in making decisions about questionable adverting
situations from such sources as codes of ethics, these codes provide only general
guidelines. When advertisements decisions are not clearly covered by a code, a rule or
a regulation, someone must make an ethical decision. That person must weigh the
pros and cons, the good and the bad, the healthy and harmful effect and make a value
judgment about an unfamiliar situation. These kinds of decisions are complex
because there is no clear consensus about what constitutes ethical behavior and also
because of the potential conflicts between personal ethics and what might be good for
the business. For example, even though an advertisement might increase sales of your
product;
• Do you use copy that has an offensive double meaning? For example, when
Calitos Restaurant in their recent roadside billboard, talks about “the best
Thighs and Breasts” with a picture of a delicious looking chicken plate.
• Do you stretch the truth when making a claim about the product (e.g. 99%,
synthetic)?
• Do you malign/damage your competitors’ product?
• The complexity of ethical issues requires us to make a conscious effort to deal
with each situation. People should develop personal standards of what is right
and wrong. Remember it is people who create the ethical atmosphere of the
organization.

Class notes: BBM212 SEPT-DECEMBER 2018.

Ethical issues in advertising
Advertising involves many ethical issues which include:

i. Puffery
Puffery is defined as “advertising or other sales representation which praises the item
to be sold with subjective opinions, superlatives or exaggerations, vaguely and
generally, stating no specific facts” For instance, “the strongest washing powder for the
cleanest wash”. It is exaggeration or untruthful advertising. The legal logic assumes
that consumers expect exaggerations and inflated claims in advertising and therefore
know that certain statements (puffs) are not to be believed as literal facts.

ii. Taste
What constitutes ‘good taste’ is varied and depends on individuals. What is a good
taste to some people are bitter herbs to others. Therefore, different things offend
different people. Young people for example may find sexy advertisement appealing and
exciting while older consumers view them with dismay. Television advertisements for
certain products such as feminine hygiene aids, bras and girdles, laxatives, designer
jeans etc produces high levels of distaste than do advertisements for other product
categories. Although certain advertisements might be in bad taste in any
circumstances, viewer reaction may be affected by such factors as:
▪ Sensitivity to the product category (some products such as feminine
towels are sensitive especially when advertised during dinner)
▪ Time the message is received
▪ Whether the person is alone or with others when viewing the message.
However, taste changes over time. What is offensive today may not be considered
offensive in the future.

iii) Sex
Closely related to taste is the use of sexual innuendo, (unpleasant remark) nudity and
violence. Although the use of sex in advertisement is not new, the openness
(shameless) of its use is. The fashion industry has often been criticized for its liberal
use of sex in advertising. It is therefore, to the advantage of the advertiser to be aware
of current standards of taste. Advertisements should be pre-tested so as to reduce the
chances of producing distasteful advertisements.

iv) Stereotype
This involves presenting a group of people in an unvarying pattern that lacks
individuality. Critics claim that many advertisers stereotype large segments of our
population especially women, minorities and the elderly. Advertisers should ask
themselves whether their advertisements shape society’s value or simply mirror them.
Many advertisements have portrayed women as homemakers-(old fashion) instead
they should be portrayed as executives. Many other advertisements have portrayed
women as objects of harassment or so naïve, and appearing in magazine ads while
almost nude. This is misuse of women models which should be discouraged.

v) Advertising to children
Issues here concern the regulation of children’s advertisements especially those who
do not possess the necessary skills to evaluate advertising messages. Also certain
advertisements techniques and strategies for adults are confusing or misleading to the

Class notes: BBM212 SEPT-DECEMBER 2018.

children. Advertisers should therefore, deal with children advertisements in a manner
sensitive to children special needs.

i. Advertising controversial products

a. Alcohol and tobacco

These products are thought to be unhealthy and unsafe. In Kenya, until recently,
advertisers of such products only included very small letters as the “caution !” For
example, cigarette smoking is harmful to your health. However, the global argument is
that the tobacco and alcohol industries intention is to advertise to only those who
have already decided to use their products and not to persuade nonuser to try them.

b. Condoms
Should condoms be advertised or not and if so, in what media? In the past magazines
have been more receptive to condom advertisements than the TV. Today, however,
both media are extensively used. Supporters of such advertisements contend that the
growing number of sexually transmitted diseases (such as HIV/AIDS) make such
advertisements necessary. Further, such advertisements can be done in good faith
and at appropriate times, so that few groups would be offended. Proper targeting for
use of condoms should also be emphasized. Abstaining should also be emphasized as
the best strategy especially among the youths and the unmarried.

c. Subliminal advertising
A subliminal advertising is one that is transmitted in such a way that the receiver is
not consciously aware of receiving it. This usually means that the symbols are too
faint or too brief to clearly to be recognized. The symbols are transmitted in a manner
that puts them below the threshold of normal perception. The messages are buried
so skillfully that the average person does not notice them unless they are put out. In
some wines – some people may look through and see some strange symbols.

d. Deceptive advertising
Many advertisements are misleading or untruthful and deceive the consumer.
Advertisers should have a reasonable basis for making a claim about product
performance and in many instances, may be required to provide substantial evidence
to support their claims. Deceptive advertisement takes the form of:
• Deceptive pricing
• False criticisms of competing products
• Deceptive guarantees
• Ambiguous statements and false testimonials.

II. Social Responsibility in Marketing

Most marketing organizations do not intentionally work in isolation from the rest of
society. Instead they find that greater opportunity exists if the organization is visibly
accessible and involved with the public. As we have seen, marketing often operates as
the “public face” of an organization. When issues arise between the public and the
organization marketing is often at the center. In recent years the number and variety
of issues raised by the public has increased. One reason for the increase is the
growing perception that marketing organizations are not just sellers of product but

Class notes: BBM212 SEPT-DECEMBER 2018.

also have an inherent responsibility to be more socially responsible, including being
more responsible for its actions and more responsive in addressing social concerns.

Being socially responsible means an organization shows concern for the people and
environment in which it transacts business. It also means that these values are
communicated and enforced by everyone in the organization and, in some cases, with
business partners, such as those who sell products to the company (e.g., supplier of
raw material for product production) and those who help the company distribute and
sell to other customers (e.g., retail stores).

In addition to ensuring these values exist within the organization and its business
partners, social responsibility may also manifest itself in the support of social causes
that help society. For instance, marketers may sponsor charity events or produce
cause-related advertising.

Marketers who are pursuing a socially responsible agenda should bear in mind that
such efforts do not automatically translate into increased revenue or even an improved
public image. However, organizations that consistently exhibit socially responsible
tendencies may eventually gain a strong reputation that could pay dividends in the
form of increased customer loyalty.

How organizations need to demonstrate social responsibility to its society

An organization can demonstrate social responsibilities in many ways:

1. Take corrective action before it is required (e.g. recall an unsafe consignment);
2. Work with affected constituent to resolve mutual problems;
3. Work to establish industry-wide standards and self regulation;
4. Publicly admit your mistakes;
5. Get involved in appropriate social programs;
6. Help correct environmental problems;
7. Monitor the changing social environment;
8. Establish and enforce an organization code of conduct;
9. Take needed public stands on social issues;
10. Strive to make profits on an ongoing basis.

III. Consumerism
Consumerism relates to the activities of government, business and other organizations
that are designed to protect individuals from practices infringing upon their rights as
consumers. This definition is based on the premise that consumers have basic rights
that should be safeguarded. In 1962 president John F. Kennedy of USA sent Congress
the Consumer Bill of Rights, the purpose of which was to guarantee consumers several
basic rights fundamental to the effective functioning of an economy (Hoyer and
MacInnis, 2001).

These rights include:

Right to safety- consumers should be protected from products or services that

might be hazardous to their health and safety;

Class notes: BBM212 SEPT-DECEMBER 2018.

 Right to be informed- Consumers should be protected from fraudulent or
misleading advertising and other forms of communications and should access
to the information needed to make informed decisions;

Right to choose- Consumers should access to a variety of products and services

at competitive prices wherever possible. If choice is restricted, the government
should ensure that consumers receive satisfactory quality and fair prices;

Right to be heard- Consumers have the right to be heard, complaints or

otherwise;

Since 1962, several other rights have been added which include;

Right to consumer education- Consumers have the right to access to knowledge

about the products or services acquired and consumed;

Right to recourse and redress- Consumers have the right to fair settlement of
problems encountered in their business transactions;

Right to an environment that enhances the quality of life- Consumers have the
right to live in an environment that is not threatened by pollution and
hazardous waste.

Need to avoid practices violating consumer rights

Businesses today need to avoid violating consume rights and try to do all they can to
understand and protect them. This is because:
• The business environment has become so competitive that people are more opt
to patronize and purchase from those firm perceived as customer –oriented but
not from those seen as greedy;
• Consumers of today are very knowledgeable and selective than in the past.
Business organizations must offer their value, provide detailed information and
be prepared to handle questions and complaints;
• Today’s customers are price sensitive and are highly aware of prices changes;
• Consumers have become very sophisticated and need individualized attention
from the organization;
• The technology explosion has enlightened consumers. A business organization
must move at the same pace with the technology in order to be competitive.
• Some businesses such as retailing are in direct contact with customers, so they
are often blamed and asked to solve problems caused by manufacturers (such
as defective products or spoilt merchandise). Such businesses must learn to
reconcile the interest of suppliers and customers. In addition, they can pass on
safety, information, and recommendations to suppliers.

END

Class notes: BBM212 SEPT-DECEMBER 2018.