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Mountain View Adventist Academy

Principles of Business

Difference Between Market And Marketing

A market is any space within which trade takes place between buyers and sellers for a well-defined
product. This space can be a produce market, a shop, internationally between countries or over the internet.
Marketing is all those activities that facilitate trade. These include activities that identify consumers’ needs such
as market research and those activities that satisfy consumers needs e.g., packaging and distribution. Marketing
activities therefore support the marketing of goods and services.
Marketing Activities
Market research – the process of gathering information about potential customers.
Packaging – creating a suitable package for product usage and for advertising
Branding - differentiating the product of a company from other brands and establishing loyal customers.
Pricing  - identifying the right price that will encourage sales
Advertising – methods used such as the media to inform and encourage the purchase of goods and services
Sales promotion – short-term methods used to encourage consumers to buy during a specified period
Distribution - methods used to make the product available to consumers. For example wholesale, retail or
internet.
Market Research
Market research is the gathering, recording and analysing of data to address the marketing problems of a
business. Market research must be specific to the problem of a business. The marketing problem must therefore
be clearly identified so that the appropriate market research may be conducted.
Types of Market Research
Consumer Research – garners information on consumers’ feelings, thoughts and reactions towards a company’s
good or service.
Product Research – determines customer acceptance of the product.
Distribution Research – used to identify the most suitable channel of distribution for particular products.
Advertising Research-   Identifies the most suitable media to present the advertising message.
The Marketing Research Process
This consists of five steps:
1. Identifying or defining the problem.
2. Developing information sources.
3. Collecting the information.
4. Analysing the data by using charts and graphs
5. Presenting the findings.
Reasons for Conducting a Market Research
Market research provides managers with current, relevant, accurate and reliable information concerning
competitors, advertising, distribution and potential and loyal customers. This information assists managers in
making decisions about packaging, product design, pricing, distribution and advertising.
The Marketing Mix
The marketing mix also referred to as the 4 Ps of marketing, categorizes all the various strategies used in the
marketing of goods and services.  These categories are product, promotion, pricing and place.
(1) Product this includes product designing, packaging, labelling and branding.
(2) Promotion advertising, public relations and sales promotions.
(3) Pricing includes various pricing strategies and methods.
(4) Place distribution of products.

Factors That Influence Consumer Behaviour

The following factors will cause consumers to either increase or decrease their demand for a product.
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-The price of a commodity
Consumers can afford to buy more of a good when its price falls and less when its price rises.
-The prices of other goods and services (substitutes and complements)
Substitute products are those that can be used alternatively as they satisfy the same need for a consumer. For
example, a weekly shopper may decide to purchase fish instead of chicken because the price fish has fallen
significantly less than the price of chicken. Therefore either fish or chicken will be adequate for dinner. If by the
next week the price of fish rises and becomes more expensive than chicken then the consumer will opt for
chicken.
Complements are goods that are used together e.g. bread and butter.  If the price of butter rises then its demand
will fall and so will the demand for bread. Conversely if the price of butter falls, its demand will rise and so too
will the demand for bread.
Income of consumers
As income level rises consumers will demand more goods and services
-Taste and Preferences
A change in consumers taste for goods and services will impact their demand.. For example, changes in fashion
will result in a drastic decline in demand for an out going fashion and a rise in demand for what is trendy.
-Expectations of a future Rise in Price
If consumers expect the price of a commodity to rise in the near future, they will try to purchase more now,
before the price increases.
-Brand Loyalty
Brand loyalty will ensure a continuous demand for a product regardless of changes in its price or the prices of
other goods and services.
-Spending Patterns
Consumer spending surveys compile information on consumer spending patterns based on income levels. This
informs businesses of what goods and services are in demand.
-Changes in the size of the population
A population decline will cause demand to fall in a particular region. One reason for a population decline in a
region is migration.
Packaging And Presentation Of Goods
Packaging refers to designing and producing the container that holds the product. A good package must
identify, protect and advertise the product. It must also make the product convenient to use. Therefore products
such as toothpaste are best packaged in a tube as it has to be squeezed out.  Milk must be pored from its
container. Egg containers are so shaped to hold them securely.
A package must also sell the product. It must first attract customer to buy. It must provide information about the
product i.e. ingredients, amount of contents, price, the name and address of the manufacturer and instructions
for usage.   The brand name is also displayed on the package.
Branding
A brand is any identifiable feature of a product which makes it different from its competitor. A brand may be a
name, term, symbol, design or combination of these. Examples of brand names include: Avon and Colgate.  A
brand symbol e.g.

represents the Nike brand.  A branded product will increase the value of the product in the eye of the consumer.
Methods Of Promoting Sales
Promotion includes all forms of advertising, public relations and sales promotion.
Advertising is the paid presentation of goods or services through the media for the purpose of encouraging
consumer patronage. The media refers to television, radio, magazines, newspapers, billboards, websites etc.
The Purpose of Advertising
-to attract attention
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-to inform customers
-to increase sales
Sales Promotion
Sales promotion is a marketing strategy that is used to induce customers to buy immediately.
Examples of sales promotion methods are:
a. A sale on items.
b. Bargain packs, e.g. ‘two for price of one’.
c. Coupons. These are printed in the daily newspaper or magazines. The holders of coupons
are allowed a discount on the items bought.
d. Games, e.g. guessing riddles
e. Contest. Purchasers may receive a prize if they are the winners of a contest.
f. Trading Stamps. These are given to purchases with each item bought. Booklets filled with
these stamps may be returned by customers for goods, services or money  in exchange.
g. Loss–Leader. A loss-leader is a product that is in high demand and is therefore used to attract consumers to a
business location by cutting its price very low. The business uses a loss leader to attract large number of persons
to its location so that other items will be sold. The profits lost on this product will be made up on the high sales
turnover of the other products that will be bought along with the loss-leader.
Public Relations
Public relations activities are aimed at creating a favourable impression of a business in the eyes of the public.
Public includes its customers, its suppliers, the government and the surrounding community. Public Relations
activities include sponsorship of local sporting events, press conferences, and donations to charity.
Techniques Of Selling
These are methods used to sell products more effectively by focusing on each customer’s personal needs.
Selling techniques include:
1. Personal Selling
2. After-sale services such as warranty and installation
3. Merchandising
4. Good Customer Relations
Personal Selling
This is the use of sales persons to present and sell goods and services of a firm. Sales persons promote a firm’s
goods directly to a specific consumer. They locate new customers, provide display services, demonstrate the use
of products, deliver goods, collect payments and provide the firm with feedback
After Sales Services
Customers are entitled to these services once they have made a purchase.  They include delivery, installation
and warranty. These services are free and therefore usually encourage consumers to buy.
Merchandizing
Merchandizing refers to self service methods of sale. This is used in supermarkets and department stores. It
allows for a better display of goods and creates a more comfortable shopping environment.
Good Customer Relations
Building good relationships with customers ensures customer satisfaction, repeat customers and
recommendation to new customers. The sales staff must be trained in the principles of good customer relations.
This entails, listening to customers being helpful and polite.
Terms Of Sale
A business establishment may offer its customers various terms to settle accounts.
Cash
This is preferable by most businesses and therefore customers are encouraged to make cash payments. They are
usually offered a lower payment amount for goods bought for cash.
Credit

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Customers are allowed to pay at intervals over a short- term, usually one to three months to settle outstanding
balances.
Hire Purchase
Hire-purchase is a long term payment plan e.g. 24 – 36 months. Interest is charged to the customer increasing
the amount owed.
Cash Discount
A cash discount is a reduction in the price of a good that is paid for immediately or over a short period of time
by a customer. For example, if a an appliance store offers 5% discount on items bought for cash then 5% of the
sale price would be deducted from the actual bill
Trade Discount
A trade discount is the reduction in the price of a good given by a manufacturer or a wholesaler to a retailer to
allow the retailer to make a profit or to encourage bulk buying. Thus if an appliance manufacturer offers 10%
trade discount to retailers then 10% of the catalogue price or the quoted price would be deducted from the
retailers’ actual bill.
Consumer Organizations
Consumerism is defined as the education and the protection of consumers to prevent their exploitation.
Consumer exploitation includes:
-overcharging
-offering poor quality goods and services
-short measurements and weights
Consumerism is practised by various groups in the economy: the government, private nstitutions, and private
firms.
Consumerism practiced by the government
This is done through various government agencies. These include:
1. The Consumer Affairs Commission – This institution was set up to disseminate information about consumer
rights and responsibilities as well as provide consumers with an avenue for redress if they are exploited.
Consumer Rights
-The right to safety
-The right to be informed
-The right to choose
-The right to be heard
-The right to redress
-The right to consumer education
-The right to a healthy environment
Consumer Responsibility
-The responsibility to beware
-The responsibility to be aware
-The responsibility to think independently
-The responsibility to speak out
-The responsibility to complain
-The responsibility to be an ethical consumer
-The responsibility to respect the environment and avoid waste, littering and contributing to pollution.
2. The Fair Trading Commission – This agency was set up to administer the fair trading act. It is concerned with
matters such as; Tied selling (marrying of goods), misleading advertising (untruths about goods and services
presented for sale), untrue sale (an announced sale for which the price of items remain the same).and the use of
market dominance to squeeze firms out of the industry (For example, large firms may drop the price of their
goods so low that small firms are unable to compete with them.)

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3. The Bureau of standards -The bureau carries out regular checks on business enterprises to ensure that goods
and services offered for sale meet the standards stipulated by this institution.
4. The Ombudsman
The Ombudsman is a government official who protects the rights of citizens who may suffer any kind of
injustice from dealing with a government agency or a government official. For example, the Ombudsman will
investigate the death of a loved one due to the negligence of a public hospital.
Consumerism practiced by private Institution
-Local consumer groups
-Radio talk show hosts listens to consumers’ complaints
Consumerisms practiced by private firms
-Offering warranty/guarantees on items sold
-Labels carry information on ingredients, nutritional content and health risks that may be associated with the
product.

Copyright, Patent & Trademark

Copyright is a form of intellectual property right that legally protects the creators and innovators of original
works. Copyright protects creators’ expressions such as music, painting, movie, photograph, writings etc.
Individuals who wish to use works that are copyrighted must request permission from its creator. Copyright law
allows creators of original work to be paid for them. Other forms of intellectual property rights are patents and
trademark.
Patent protects innovation. It excludes others from making and selling that invention for a number of years.
Trademark legally protects brand names. It gives the seller exclusive rights to use a particular brand name.