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Course Code: MKT 121

Course Title: PRINCIPLES OF MARKETING

Course Description:

Marketing definition, concept, evolution, role and importance, the marketing system
and marketing environment, product classification and marketing.

Course Content

1.1Objectives
1.2Introduction
1.3Definition of Marketing
1.4Definition of Marketing related concepts
1.5The role & Importance of Marketing
1.6The evolution of Marketing thought
1.7The Marketing Concepts
1.8Marketing mix.
1.9Market segmentation
1.10 Marketing Environment
1.11 Product classification & Marketing
1.0COURSE OBJECTIVES
This Lecture material is meant to provide you with necessary information about,
the practice of producers’ cooperative management. The course aims at exposing
students to the basic concepts of marketing and the role of marketing in modern
business. It also seeks to introduce you to the origin of marketing and marketing
philosophies, classifying marketing functions, identifying various ways of
classifying products, helping you to appreciate the role of middlemen in modern
business, explaining the various means of promoting products and modes of
segmenting markets.
Upon completion of this course, it is expected that students should be able to:

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1. Define marketing
2. Explain the underlying principles or philosophical concepts of marketing
3. Distinguish markets, marketer and marketing in a succinct manner.
4. Explain the basis upon which markets are segmented.
5. Explain what marketing mix entails
1.0INTRODUCTION
Marketing is indeed an ancient art; it has been practiced in one form or the other,
since the days of Adam and Eve. Today, it has become the most vital function in
the world of business. Marketing is the business function that identifies unfulfilled
needs and wants, define and measures their magnitude, determines which target
market the organisation can best serve, decides on appropriate products, services
and programmes to serve these markets and calls on everyone in the organisation to
think and serve the customer. Usually, market leadership is attained through
creating innovative, quality and a well-tailored customer service programmes that
appeal to both existing and prospective customers. Failure to get this right, no
amount of advertising and sales promotion can yield a desired result to both the
organisation (i.e profit), the customer (expected products or service) and
shareholders (RoI).
1.1MARKETING DEFINED
There is no singularly acceptable definition of Marketing as there exist many
scholars or writers in the field of marketing. This goes to say that different
definition of marketing exists as most authors defined it based on their
conceptualization of it. Many people think of marketing only as selling and
advertising owing to the fact that- every day we are bombarded with radio and
television commercials and other various mediums through which marketers of
product or services use to communicate us (the targeted consumers) with their
product offerings. It should be noted that marketing goes beyond selling and
advertising. In fact, selling and advertising are only a subset of what marketing

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entails. However, we can draw from the pool of various definitions of marketing as
follows:
1. According to Philip Kotler & Garry Armstrong in the 12 th edition of their book
titled Principles of Marketing they noted that on a broader perspective,
‘Marketing is a social and managerial process by which individuals and
organisations obtain what they need and want through creating and exchanging
value with others.’’
2. In a narrow perspective, ‘marketing involves building profitable, value-laden
exchange relationships with customer and build strong customer relationships in
order to capture value from customers in return.’’

3. Marketing is a total system of business activities designed to plan, price,

promote and distribute want-satisfying goods and services to present and
potential customers (Stanton, 1964).
4. The American Marketing Association (AMA) 2013 defined marketing as the
activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients,
partners, and society at large.

5. Marketing is the set of activities that facilitate exchange transactions involving

economic goods and services for the ultimate purpose of satisfying human
needs (Nwokoye, 1981).

A critical look at the definitions of marketing you may come across would show
some common terminologies are used in the definitions which includes creating,
communicating, delivering and exchanging offerings that have value to both the
customer and the organization. So basically, marketing embraces the activities
we engage in to satisfy economic needs and wants.

1.2

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1.3DEFINITION OF MARKETING RELATED CONCEPTS

Having critically studied the various definitions of marketing, it is pertinent that we
discuss the key terms which are pivotal in the definition of marketing. These are at
the crux of marketing.
 Needs: Human needs form the most basic concept underlying marketing.
Human needs can be defined as a state of felt deprivation of some basic
satisfaction. They include the basic needs for human survival such as food,
clothing and shelter, safety, social needs, belonging, health, education, a
desire for recreation and other services. These needs are not created by the
society or marketers but are rather inborne in human.

 Wants: Wants are human desires for satisfaction of specific deeper needs.
To explain, this concept further for clarity purpose, we all need clothing but
want a GUCCI shirt,( the price of a GUCCI striped cotton polo sweater for
instance goes for as much as £800. ie N352,000 @N440/£) we as well all
need food but want chicken paper soup. So we can say that human needs are
few, but their wants are numerous. These wants however, are continually
shaped and reshaped by social forces and institutions such as families,
church, schools and business corporations. Marketers don’t create needs,
needs pre-exist in markets. Marketers along with other inferential in the
society, influence wants. They suggest and inform consumers about certain
products and persuade them to purchase, stressing on the benefits of such
products
 Demands: Quite often, people have unlimited wants, but limited resources
to satisfy those wants. Demands are therefore, wants for specific products
that are usually backed by the willingness and ability to buy the products.
Any desire or willingness to consume a particular good or services that is not
backed by the ability to buy cannot be seen as actual demand. For instance
we may desire to own an apple MacBook computer, a luxurious car etc. but

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lack the purchasing power to back the desire. So only when wants get backed
by purchasing power, they then become demand. It therefore becomes
imperative that marketers should not only ascertain how many people want
to consume their products but it is very essential that they measure how
many represent actual demand (i.e those whose wants or willingness to buy
are actually backed by the capability to buy).

As earlier pointed out that marketers do not create need in human but rather
they simply influence wants alongside other societal forces and institutions.
Marketing executives often do so by suggesting to customers/consumers that
certain product and/or service or perhaps a particular brand would satisfy a
person’s need for social status. They then try to influence demand by making
the product very attractive, affordable and available such that it appeals to
the targeted consumers.

 Products: we satisfy our needs and wants with product. We can define
product as anything of value that can be offered to someone to satisfy a need
or want. The mention of the term product often brings to mind a physical
object, something tangible such as Mobile phones (Handsets), a wrist watch,
a motorcycle etc. as students of marketing, it should be noted that product
goes beyond the physical objects mentioned above but it also covers
intangible objects such as bank services, tailoring services, it may even be a
transport service all of which you will agree with me are offered to satisfy
needs or wants. The other name marketing executives used as synonymous
to products are resources, offers and satisfiers. It should be noted that people
do not buy physical objects for their own sake. For examples, a vehicle is
bought to serve ones need or want for mobility. In other word, the
transportation purpose it serves hence marketer’s job is to sell the service
packages built into physical products.

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 Exchange: It should be noted that simply because you and I have needs and
wants to satisfy through products and service offering alone does not fully
explains the concept of marketing. Marketing comes fully in force when
consumers opt to satisfy their needs and wants through exchange. Exchange
is seen as one of the many ways in which consumers can satisfy their needs
and wants by means of offering money and getting what they want or need in
return for the money offered. Other means through which people may satisfy
their needs and wants are through self-production, use of force (coercion),
begging (then offer gratitude only in exchange). Marketing focuses only on
the first being exchange as a means of satisfying needs and wants because it
has much in favour because its apparent that people don’t have to bore
themselves with acquiring the skills to self-produce everything they need or
want to consume as you will agree with me it is not going to be possible. So
it is better people focus on the production of what they are best suited and
then trade it off with other items of need or want produced by others. Doing
so allows exchange to thrive and makes a society to produce more than it
would.
Since exchange is seen as a value creation process in itself, it is expected that
it should leave both parties to it better-off than worse-off in the end of it all.
The parties are seen to be working towards consummating a mutually
beneficial agreement through negotiation of terms. Thus, Kotler (1984)
argued that for exchange to take place, the following five conditions must be
met;
1. There must be at least two parties
2. Each party must have something of value to the other party
3. Each party must be capable of communication and deliver
4. Each party must be free to accept or turn-down the offer by either of the
parties.

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5. Each party believes it is appropriate or desirable to deal with the other

party.

 Market: with the concept of exchange comes the concept of Market. To a

layman on the street out there, a market is viewed as basically the market
place as in Lafia central Market, or ALHAMIS market. He or she sees a
market in the form of a location where consumers of products and or
services meet to exchange their wares. To the economists often use the term
to refer to a collection of buyers and sellers who transact in a particular
product class, such as clothing market, electronic market, cattle market, etc.

A market from the marketing point of view is defined as;

Consist of all the existing and potential customers that share a particular
need or want who might be willing and able to engage in exchange to satisfy
that need or want.
or
A market is defined as a set of all actual and potential buyers of a product
and service.
Marketers see those buyers as a set of buyers who share same or a particular
need or want and which can be satisfied through exchange. Marketers see the
size of a market in terms of the number of people with common needs and
who are willing to satisfy their needs and wants and also have the financial
muscles to engage in exchange just to satisfy the needs or wants.

 Marketer: A marketer can be seen as any person whose job is to identify

goods and services that a particular set of consumers need or want and is
responsible for marketing such goods on behalf of their company. They
could either occupy the position of a buyer or seller depending on the

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circumstance. A marketer therefore, is someone seeking resources from

someone else and is willing to offer something of value in exchange.
 Marketing: The concept of market, marketer completes the circle of the
concept of marketing. Marketing therefore entails human activities taking
place in relation to markets. It means working with markets to actualize
potential exchanges for the purpose of satisfying human needs and wants.

THE ROLE AND IMPORTANCE OF MARKETING

It suffices to say that the role and importance of marketing cannot be over emphasised
for the role and importance of marketing includes but not limited to the following:

1. The first role is that it stimulates potential aggregate demand and enlarges the
size of the market thereby helps in the economic growth of a country. Through
stimulation of demand, people are motivated to work harder and earn additional
money (income) to buy the various goods and services being marketed. An additional
advantage which accrues in the above context is that it accelerates the process of
monetising the economy, which in turn facilitates the transfer of investible resources.
2. Another important role of marketing is that it helps in the discovery of
entrepreneurial talent. Peter Drucker, a celebrated writer in Management, makes this
point very clear when he observes that marketing is a multiplier of managers and
entrepreneurs.
3. It helps in sustaining and improving the existing levels of employment. You
may wish to ask, how this can be made possible. The answer is that when a country
advances economically, it takes more and more people to distribute goods; and while
it takes, proportionately, a lesser number to make them. That is, from the employment
point of view, production becomes relative significant than marketing and the related
services of transportation, finance, communication, insurance, etc. which spring
around it becomes important.

1.4
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1.5THE MARKETING MANAGEMENT PHILOSOPHIES

The marketing management philosophies otherwise called marketing orientations
or marketing concepts are the set of guiding principles upon which marketers
achieve their predetermined goals and objectives. Like in many professions, these
are the bases upon which marketing activities revolve. Often times, firms vary in
their orientations to the market place. As a result, this has led to the emergence of
many different concepts of marketing. Marketing activities ought to be carried out
in a well thought-out philosophy such that it will guarantee an efficient, effective
and responsible marketing The extend with which marketing executives critically
study and analyse these concepts and apply them as at when necessary will
determine to a greater extent the degree of successes or failures of their
organisations as they compete amongst other organisations in the market which
they serve. By marketing management, it is meant that branch of marketing that
focuses on analysis, planning, implementation and control of programs designed to
create, build and maintain a mutually beneficial exchanges with the targeted
market/consumers with the ultimate aim of achieving organisational goals and
objectives. These philosophies are:
i. The Production Concept

The production concept or production orientation holds that consumers will value
products that are available and highly affordable, and that management therefore
should focus on improving production and distribution, efficiently. This concept is one
of the oldest philosophies that guide sellers. The production concept is a useful
philosophy which applies to the following situation.

 In a situation where the demand for a product exceeds the supply, it therefore
implies that management should look for measures of increasing production of
such products.
 When the cost of a particular product is too high and there is the need to
improve productivity so as to bring the cost down, increase access by the

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consumers and as well to maintain market turnover, it thus implies that

management should improve facilities and reduce prices of their
products/services- as obtained in the telecommunication market in Nigeria.
ii. The Product Concept

The product concept assumes that consumers will value those products that offer
superior quality or performance and innovative features. Thus, marketing executives
under the product-oriented organisations should focus on making good products and
imbibe on research to making continuous product improvements time over time in
order to gain a substantial share of the market or maintain market leadership position.
The product concept plays an important role today. This is because consumers are
diverse in their needs and wants. Thus, they need to be served based on the peculiar
nature of their needs and environmental consideration.

However, marketing executives should be careful in applying this concept. Quality

and innovative features may involve additional production costs, which in the long run
the consumers may be compelled to bear the burden. Thus, income of the consumers
and their willingness to pay for these new features should be given consideration
otherwise, the product concept can lead to ‘market myopia’. [A situation whereby
marketing executives give undue consideration on products rather than on the needs it
seeks to satisfy in the consumers, ironically the market may not admire the well-
designed nature in which a supposed newly improved product may offer but rather
customers are just after the satisfaction from its consumption. In fact the customers
need may even be changing to a different direction.] Example is a mobile phone that is
well designed on the assumption by marketing managers that buyers will admire it and
can appraise its quality and performance but only to realise that customers don’t really
fancy it but are rather after the basic purpose it is meant to serve. Which is to
communicate.

iii.

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iv. The Selling Concept

The selling concept holds that consumers, if left alone, will ordinarily not buy enough
of an organisation’s products. The concept assumes that consumers exhibit what is
typically seen as buying inertia or resistance. The organisation must, therefore, make
concise efforts by undertaking an aggressive selling and promotion efforts. Such an
approach if adopted by firms, it is expected that it will aid in penetrating their target
markets.

The selling concept assumes that the consumers’ resistance has to be overcome and
the consumers should be coerced into buying more; and that the company has to use
various strategies of effective selling and promotion tools to stimulate more buying.
The selling concept is practiced both by profit and non-profit making organisations.

For instance, the selling concept is practiced aggressively with ‘unsought goods’
those goods that buyers, normally, do not think of buying, such as insurance policies,
and thus, various sales techniques are used to locate potential and prospective buyers.

The selling concept is also practiced by non-profit organisations such as fund raisers,
colleges/universities, politicians, and even political parties in selling their candidates
to the electorates during electioneering campaigns.

Most firms practice the selling concept when they have surplus production. In modern
economy, productive capacity have been built up such that prospective buyers are
bombarded with television commercials, newspaper adverts, and sales calls. At every
turn, someone is trying to sell something. As a result, the public identifies marketing
with hard selling and advertising as we see commonly obtained in the banking and
telecommunication industry.

However, for selling to be effective, it must be preceded by several marketing

activities such as- need assessment, marketing research, product development, pricing
and distribution. If marketers do a good job by identifying customers’ needs,

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developing appropriate products and pricing, distributing and promoting them

effectively, products may sell very well.
Though there is this saying in marketing that a good product sells itself, that is to say it
needs no advertising or hard selling. Most products that rank high as best sellers didn’t
just emerged so but as a result of a well thought-out marketing homework. However,
this maxim doesn’t hold as far as the selling concept is concerned. Indeed, marketing
based on hard selling carries high risks. It assumes that customers who are coerced
into buying the product will like it; and if they don’t, they won’t bad-mouth it to
friends or complaint to consumer organisations such as we have the Consumer
protection agency, public complaint commission in Nigeria. And it is also assume that
they will forget about their disappointment and buy it again. But these are really
indefensible assumption to make about buyers for one study shows that disappointed
customers bad-mouth the products to eleven acquaintances, while satisfied customers
may good-mouth the product to only three. Singh and Bansal (2003).

v. The Marketing Concept

The marketing concept is a business philosophy that evolved to challenge the previous
concepts. The marketing concept holds that the key in achieving organisational goals
consists in determining the needs and wants of target markets and delivering the
desired satisfactions, more effectively and efficiently than other competitors.

Theodore Levitt drew a contrast between the selling concept and the marketing
concept where he noted that while selling focuses on the needs of the seller, marketing
concept focusses on the needs of the buyer. This is to mean that selling is majorly
concerned with seller’s need to convert his product to cash; marketing is basically
preoccupied the idea of satisfying the needs of the customers by means of products.

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These concepts are briefly examined below:

a. Market focus- no company can operate in every market and satisfy every need;
nor can it do a good job within one broad market. For example, in the automobile
industry, Toyota has variety of brands of all kinds to satisfy their target markets, e.g.
luxury buses, passenger buses etc. Also, in soft drink industry, Coca-Cola Nigeria Plc
has the 25cl and 35cl brands for its target markets.
b. Customer orientation- a company can define its market carefully, and still fail
at customer-oriented initiatives. Customer oriented thinking requires the company to
define customer needs from the customer point of view, not from its own point of
view. Every product involves trade-offs, and management cannot know what these
are, without talking to customer and researching into customers’ needs. For instance, a
car buyer (Toyota) would like a high performance car that would never break down- a
brand that is attractively styled and cheap. Since all of these features may not be in
one car, car designers must make hard choices, not on what pleases them, but rather on
what customers prefer or expect. The aim, after all, is to make a sale through meeting
the needs of customers.

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One may ask this question-why is it important to satisfy customers? It should,

however, be noted that a company’s sales- each period, come from two groups- new
customers and repeat purchase customers(i.e existing customers). It always costs more
to attract new customers than to retain current customers. Hence, customer-retention is
more critical than customer attraction. The key to customer retention is customer
satisfaction. Satisfied customers do the following:

a. they buy again

b. talk favourably to others about the company
c. pay less attention to competitive brands and advertisements
d. buy other products from the same company.

To buttress these views, according to one Japanese businessman the aim of every
business concern should go beyond satisfying customers- the focus should be to
delight the customer. Sales people go beyond meeting the mere expectations of the
customer; when they delight a customer, the customer talks to more acquaintances
about the company. The delighted customers are more effective advertisers than the
advertisements placed in the media.

Consequently, when a company creates a dissatisfied customer, they spread their

feelings to others without being asked. This is because, bad words travel faster and
further than good words, and can easily poison the public’s attitude about the
company. In summary, a customer-oriented company will track its customer
satisfaction level, each period, and set improvement goals.

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c. Coordinated marketing - Coordinated marketing means two things, as you are

going to see below.

1. The various marketing functions- sales force, advertising, product management,

marketing research and host of others, must be coordinated all together. These
marketing functions must be coordinated from the customer point of view.
2. Marketing must be well coordinated with the activities of other departments of
the company. Marketing does not work when it is merely a department; it only works
when all employees appreciate the effects they have on customer satisfaction1
d. Profitability- the purpose of the marketing concept is to help organisations to
achieve their goals. In private firms, the major goal is profit, while in non-profit and
public organisations; the goal is surviving and attracting enough funds to perform their
work. In essence, the key is not to aim for profits as such, but to achieve them as a by-
product of doing the job well. For example, the General Motors executive said- “we
are in the business of making money, not cars”; here, he is misplacing the emphasis. A
company makes money by satisfying customer needs better than competitors. This is
not saying that marketers are unconcerned with ‘profits’. Quite contrary, they are
highly involved in analysing the profit potential of different marketing opportunities.
The sales force/people focus on achieving sales volume goals, while marketing people
focus on identifying profit making opportunities.

vi. The Societal Marketing Concept

The societal marketing philosophy is one of the recent concepts amongst the
five marketing management philosophies which suggest that firms shouldn’t
just make marketing decision by focusing on consumers’ needs or wants and
then strives to satisfy those wants and thereby making profit through the
satisfaction of the customers’ needs/wants only but rather companies should
also consider the society’s long-term interest.

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The societal marketing concept holds that the organisation should determine
the needs, wants, and interests of target markets. It should then deliver the
desired satisfactions, more effectively and efficiently than competitors in
such a manner that it preserves or enhances the wellbeing of the individual
consumer and the society at large. The societal marketing concept questions
whether pure marketing concept is adequate in an age of environmental
problems, resource wastages, rapid population growth, worldwide economic
crisis and neglected social services.
The societal marketing holds that a pure marketing concept overlooks
possible conflicts between short run consumer wants and long run consumer
welfare. The societal marketing philosophy is closely linked with the
concept of corporate social responsibility (CSR) and can best be explained in
the context of the Niger-delta region in south-south of Nigeria where there
has been a lot of concern over the unwholesome activities of the oil
companies that often leads to all forms of human and environmental
degradation. The environmental pollution following the activities of the oil
firms has caused more harm than good to the communities there and calls for
lots of concern.
vii. The Sustainable Marketing Concept
Sustainable marketing philosophy is the trending philosophy in today’s
world of business. The subject matter of sustainability has been in the discus
for years, it is basically concerned with how the present generation will meet
its needs without hampering the ability of the up-coming generation from
meeting theirs. More recently sustainable business practices have come to
the forefront of consumer attention. A business that develops, embrace and
implement a business model based on sustainable marketing practices are
more likely to benefit from enhanced brand image, increase productivity and
cost reduction. It is pertinent to note that consumers are environmentally
conscious and as such would want to patronise businesses that are also

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environmentally conscious too. Sustainability as a whole rests on a tripod

stand of economic, social and environment which are infamously discussed
as profit, people and planet. A marketers offering (products) are seen as
sustainable products if they provide a combine benefits of economic, social
and environment throughout their product life-cycle across the supply chain.
1.6THE EVOLUTION OF MARKETING THOUGHT
The evolution of marketing thought calls for an investigation into the history of
marketing as a professional discipline or as a field of study. A look into the history
of Marketing as a discipline is essential as it will help in understanding the changes
that occurred in history and how the discipline actually responds to such changes
over time. Though marketing practice has been known for quite a long time in
history as the term marketing etymologically often connotes commercial activities
such as buying and selling of goods and services which actually came into use in
late 1800s. Note that there is a difference between the history of marketing practice
and history of marketing thought. History of marketing practice calls for
investigation into the ways and manners in which marketing has been practiced
over time and how those practices evolved over time in response to changing
socio-economic conditions whereas history of marketing thought refers to an
investigation into the ways that marketing has been studied and taught over time.
The two have been distinguished by marketers as two distinct areas of study. This
section of the lecture note cantered on the history/evolution of marketing thought
only.
Dating the history of Marketing as an academic field of study has been a subject of
disagreement among marketers as some argued that the period of pre-academic
marketing thought can be traced to periods before 1900 while other marketing
historians are of the believe that the 20th century marks the period when theories of
marketing began and the discipline was first offered as courses at the university, in
university of Michigan.

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Marketing develops as the society and its economic activities develop as well. The
need for marketing arises and grows as the society moves from an economy of
agriculture and self-sufficiency to an economy built around division of labour,
industrialisation and urbanisation.

During agrarian economy, the people are largely self-sufficient – they grow their
own food, produce their own clothes, build their own houses, etc. There was no
marketing, because, little or no exchange was in place.

However, in the course of time, the concept of division of labour began to evolve.
People concentrated on producing more than the quantity they needed; and
whenever people make more than they wanted, the foundation is laid for trade, and
trade (exchange) is at the heart of marketing. At first, the exchange process was a
simple one. The emphasis was largely on the production of basic needs which
usually was in short supply. Little or no attention was devoted to marketing, and
exchange was very local.

Then came the era of marketing; this came about when some producers began to
manufacture their goods in large quantities in anticipation of future demands. At
this juncture, it can be stated that marketing evolved in the United States as a by-
product of the industrial revolution.
Therefore, up to 1910, American economy was very low. It was characterised by
shortages of economic resources (goods). The middlemen were very strong; the
main problem was that of production and distribution. Modern marketing came of
age after World War I and II, when surplus and over-production became an
important part of economic activities.

In 1929, (the manufacturing era) there was manufacturing of goods and services,
but below the expected demands. The main concern was to produce enough to meet

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the demands at hand. Between 1930 and 1940’s (sales era / depression era), there
was enough production of consumer goods and services. The major problem at
hand was that of marketing/distribution. The concern was to design the most
effective channel institutions among the various alternatives. Between 1940 and
1950’s (war era), all efforts were geared towards the production of war equipment,
at the expense of the consumer goods. When the war came to an end, there were
shortages of consumer goods. Hence, efforts were geared toward the production of
consumer goods. During these periods, various authors came up with different
theories; for instance, Professor

Joe Robinson wrote on monopolistic economy. His assumption was that if a

company can produce an item in such a way that the marginal returns will offset its
price from the marginal costs, and the markets are segmented equally, then such
company would be able to maximise her profits. Thus, people became interested in
this theory.

There was another author named Wanded Smith. He wrote an article on ‘why
people must segment their markets and differentiate their products’. His argument
was based on the fact that various companies use different machine for the
production of war equipment. Besides, consumer purchasing power and tastes are
not the same. During this period, marketing concept evolved. Marketing concept is
a business philosophy that states that “the satisfaction of consumer’s want is the
economic and social justification for a firm’s existence”. It is a managerial
philosophy for performing business activities, which see the entire business
activities as a unit to be planned, mobilised to produce goods and services to satisfy
consumers’ needs in such a way as to enhance the profit of the firm.

The 1960s (marketing control era) was the period when marketing department
became well known and so much important in the U. S. A., for instance. One of the

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authors of the time, Peter Drunker states that marketing department is so complex
that it can’t be handled by a single individual. The attention, at this period, was
directed towards markets. Also, consumerism came up due to the failure of the
marketing concept. Consumerism is an organised movement of citizens and
government to strengthen the rights and power of buyers in relation to sellers.
Consumerists seek to increase the amount of consumer information, education and
protection. From the 1980’s to-date (societal era), communication has turned the
whole world into a global village. Effort has been on how to satisfy the needs of
the society, and consumers have become, increasingly, conscious of their rights
1.7MARKETING MIX
Apparently, marketers deliver value to customers through their products or service
offering by making sure that the offer fulfils the need of the customer. Marketers
also try to ensure that customer perceives the terms and conditions of the offer as
more attractive as compared to other competing offers. Marketing Mix is therefore
seen as the set of marketing tools that a firm uses to pursue its marketing objectives
in the market it targets to serve. It is the sole vehicle for creating and delivering
value. James Culliton, a marketing guru was the one who coined the expression
marketing Mix and described the marketing executive as a mixer of ingredients. To
quote him, ‘the marketing man is a decider and an artist- i.e a mixer of ingredients,
who sometimes follow a recipe developed by others and sometimes prepares his
own recipe. And sometimes he adapts his recipe to the ingredients that are readily
available and sometimes invents some new ingredients, or experiments with
ingredients as no one else has tried before’. The dynamics of the marketing process
and the versatility of the marketing process and the versatility of the marketing mix
tools cannot be described any better. Subsequently, Niel H. Borden, another noted
marketing expert popularized the concept of marketing mix. It was Jerome
McCarthy, the well-known American Professor of marketing that first described
the marketing mix in terms of the four Ps in the 1960s. They classified the
marketing mix variables under four headings each beginning with the alphabet ‘P’.

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 Product
 Price
 Promotion
 Place

Professor McCarthy has therefore provided an easy to remember description of the

marketing mix variables. Over the years, the term Marketing mix and four Ps of
marketing have come to be unanimously used.

 PRODUCT: The most basic marketing mix tool is the product, which stands
for the firm’s tangible offer to the market including the product quality, product
design, features, branding, packaging, services, warranties etc. it is the item that
the company build or produced to satisfy the needs or wants of its targeted
market(customers). Note that the product goes beyond the tangible object we
can see and touch and covers intangible objects such as insurance policy,
banking service, tourism services, and travel agency services etc. failure to
define the product right in line with the specification and need of the targeted
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market could spell doom to the entire marketing processes. Marketers are
expected to do an extensive research during the product development process by
carefully crafting its design and other features bearing in mind also the
management of the various stages in the product’s life cycle.
THE PRODUCT LIFE CYCLE MODEL (PLC)

Source: Malakooti, B. (2013). Operations and Production Systems with

Multiple Objectives.
Marketers must continuously seek to answer the question ‘what can we do to
offer a better product to the targeted customer above what the competitor is
offering’.
 PRICE: A critical marketing mix tool is the price, namely, the amount of
money that the customer has to offer/pay for in order for the customer to enjoy
the product. It is the only marketing mix that brings in money to the firm, others
only take out money out of the business purse. Thus, the price is a very essential
component of the marketing mix as it determines the profitability or survival of
the business. Marketers need to have a well-thought-out plan when deciding on
setting or adjusting prices for their product because it is highly impactful on the
entire marketing strategy of the firm. It includes deciding on wholesale and
retail prices, discounts, allowances and credit terms. Price should be

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commensurate with the perceived value of the offer (product) or else buyers will
turn to other competitors in choosing their products.
Pricing, actually shapes the perception of a firm’s product in the eyes of its
customers. Often times, customers perceive low prices as akin to low/inferior
quality products and vice-versa. However, setting prices too high which is not
commensurate with the quality of the offering could spell doom to the business.
Consequent upon this, marketers should be very careful in deciding the price of
their product.
 PROMOTION: Promotion marketing mix tool stands for the various activities
the company undertakes to communicate its products’ merits and persuade the
targeted customers to buy them. It includes deciding on hire, train and motivate
sales people to promote its products to middlemen and other buyers. It also
includes setting up communication and promotion programs consisting of
advertising, personal selling, sales promotion and public r elations.
 PLACE: This marketing mix tool refers to distribution. It stands for various
activities the company undertakes to make sure that the products gets to the
targeted customers in such a manner easily accessible and available. It includes
deciding on identifying, recruiting and linking various middlemen and
marketing facilities so that the products are efficiently and effectively supplied
to the targeted market.
Marketing mix otherwise called the 4Ps of marketing is the combination of the
product, its price, its promotion and distribution. It must be designed all by the
marketer in such a manner that those four elements together must satisfy the
needs of the organization’s target market and at the same time for the
organization to achieve its marketing objectives since marketing starts and ends
with the customer in focus.
1.8

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1.9 MARKET SEGMENTATION

Buyers in an environment have unique needs and wants; thus, each buyer is potentially
a separate market. Most often, sellers design a separate marketing program for each
buyer. However, each buyer requires a unique combination of goods and service as the
buying habit and motives differ. In order to meet the needs of consumers, marketers
divide the total markets into smaller segments, on the basis of the kind of similar
demands for a product. Also, most companies realise that they cannot compete in
meeting all the different shades of unique demands in an economy, so they aim at
focusing on few segments that seem more profitable to them.

The concept of market segmentation was coined by Wendell R. Smith in his 1965
article titled ‘’Product differentiation and market segmentation as alternative
marketing strategies’’ in that article, smith has identified many examples of
segmentation.

Market segmentation is therefore the process of dividing the market of potential

customers into different groups and segments on the basis of certain common
characteristics. It is aimed at dividing the total market in an economy where demands
for a given product are heterogeneous into homogeneous demand groups or segments,
for the purpose of providing unique or specific products or services for each segment.

The Benefits of Market Segmentation

The benefits of market segmentation are as follows:

• It makes it easier for marketing managers to identify the marketing

opportunities that exist in each customer segment.
• It makes it easier for marketing managers to properly define each market
segment and its appropriate marketing programs.

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• Each market segment becomes a marketing unit for planning, implementation

and control purpose.

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BASES OF SEGMENTING MARKETS

Segmenting consumers entails dividing a group into sub-groups according to some

common sets of characteristics. Consumer markets can be segmented through a single
variable or a combination of variables. However, it should be noted that segmentation
of consumer markets vary from company to company and product to product.
Segmentation could as well range from age group, gender, income levels or even to
some psychographic variables such as consumer buying behaviour, attitude, values
and norms etc. The general segment variables are as follows.

Geographic Segmentation

Geographic segmentation entails dividing a market into different geographic units

such as nations, states, regions, counties, cities, etc. A company may decide to operate
in one or a few geographical areas, or to operate in all areas, but pay attention to
geographical differences in needs and wants because people living in different regions
of a country may have different reasons to use the same product or service.
Geographic segmentation therefore helps marketers to come up with personalised
marketing campaigns for everyone. Examples of companies who segment their market
using geographical segmentation include Nigeria Bottling Company Plc., Seven-up
Company, Unilever Nigeria plc, NNPC, etc. Many companies today are
“regionalising” their marketing program socialising their products, advertising,
promotion and sales efforts to fit the needs of individual regions, cities, etc.

Demographic Segmentation

Demographic segmentation consists of dividing the market into groups based on

certain demographic variables such as age, gender, family size, marital status, religion,
family life cycle, income, occupation, education, religion, race, and nationality.
Demographic factors are the most popular bases for segmenting customer groups.
Besides, demographic variables are easier to measure than most other types of
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variables. Even when market segments are defined using other bases, such as
personality or behaviour, their demographic characteristics must be known in order to
assess the size of the target market and to reach it efficiently.

For example, some companies use age and life-cycle segmentation, offering different
products or using and life-cycle groups. For instance pharmaceutical companies have
different products (drugs) for different ages. Also in the apparels industry,
manufacturers of clothing materials use this variable as a basis of segmenting their
markets into baby clothes, boys and girls clothes, youth clothes and adult’s clothes to
facilitate selling activities and to serve the market efficiently. Gender segmentation
has long been used in clothing and cosmetics section. Men’s dresses are quite different
from women’s dresses in Africa, and in Nigeria in particular .Although these days, due
to western culture; a woman also uses men’s dresses. However, hair dressing and
cosmetics, are purely dominated by women.

Those who operate in the entertainment industry also use gender mutation as a way of
segmenting the market, to ensure efficiency. Income segmentation, however, has long
been used by the marketer of products such as automobiles, clothing, cosmetics,
jewelleries, wristwatches, etc. Many companies target different consumers with luxury
goods and convenience service. For example in the aviation industry where airlines
such as Arik, Bellview, British Airways chanchangi etc., operate, passengers are
classified into –first class, second class and third class, respectively. This is based on
the amount of money paid by passengers.

In the hospitality industry, income segmentation is one way of serving customers. In

fact, the amount of money paid by guests determines the facilities to enjoy. Since
income varies from person to person, and from industry to industry, markets use

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income segmentation as a way of identifying consumers’ needs in order to make

provisions, accordingly.

Psychographic Segmentation

Psychographic segmentation means dividing buyers into different groups based on

social class, lifestyle, attitude or personality; people in the same demographic groups
can have different psychographic makeup. Social class, on the other hand, influences
the types of good and service consumed. Abraham Maslow classified human beings
into various classes, using needs as a basis. For example, rich men who live in big
cities such as Abuja and Lagos resides in Maitama, Asokoro, Lekki, respectively.
These places are designated as rich men’s places; likewise, rich men prefer going to
supermarkets to shop for their goods, rather than visiting open markets. These places
are considered as high class for rich men in Nigeria.

All the classifications serve as ways of locating, the target consumers and produce
goods and services to satisfy their needs. For example, 5 star hotels are located in
Lekki, Asokoro, Maitama (Abuja) just because of the people who are residing over
there. Social classes are groups whose members share similar values interests and
behaviours.

a. Lifestyle - people coming from the same sub-cultural social class and
occupation may have quite different lifestyles. Lifestyle is a person’s pattern of living
as expressed in his her activities, interests and opinions. Lifestyle captures something
more than the person’s social class or personality.
Marketers are, increasingly, segmenting their markets by consumers’ lifestyles. For
example, cosmetics and clothing sellers used social class and life styles as a way of
segmenting markets.

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In addition, some magazines and newspapers are designed to capture particular

markets such as sports, music, etc. Life style classifications are by no means universal;
they can vary, significantly, from country to country. The life style concept, when
used carefully, can help the marketing expert to understand changing consumer values
and how they affect buying behaviour.

b. Personality- each person’s distinct personality influences his or her buying

behaviour. Personality refers to the unique psychological characteristics and lasting
responses that lead to, relatively, consistent and lasting responses to one’s
environment. Personality is, usually, described in terms traits, such as self-confidence,
dominance, interaction, autonomy, defensiveness, adaptability and aggressiveness.
Personality can be useful in analysing consumer behaviour for certain product or
brand choices. Marketing executives use personality variables to segment markets,
giving their products personalities that correspond to consumers’ expectations. Some
of the products sold using personality strategies include cosmetics, automobiles,
liquor, clothing, wrist-watches, neck-lace, houses, etc.
Behavioural Segmentation

Behavioural segmentation implies dividing buyers into groups based on their

knowledge, attitude, uses, or responses to a product. Some marketing executives are of
the view that behavioural variables are the best start point for building market
segments. Variables such as occasions, benefits sought, status, usage rate, loyalty
status, attitude toward products- among others, are used by marketers to segment
markets.

Factors to be considered for Effective Segmentation of Markets

For any potential market to be effectively segmented, the following factors are
considered important.

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1. Measurable-The size, purchasing power and profiles of the segments can be

measured. However, certain segmentation variables are difficult to measure. When
taking demographic factors such as age, education, income etc as variables for
segmentation for instance, then it needs to be measurable.
2. Accessible-The market segments should be accessible and easily be served. For
instance, product xyz was designed for blind and dumb people, who are scattered in
the country, thus, to access such target market may not be easy. Marketing
practitioners should device means of reaching their target markets. The blind and
dumb can be reached through hospitals, special homes, etc. another example is the
military cantonment areas. Businesses need to get permission from the military
authority before they can access the areas to do business, therefore in order to segment
such markets, the marketers must make special arrangement so that the segment can
be reached and served.
3. Substantial- Not all market segments can be served profitably, even though
some segments have one or few customers and marketers can sell huge volume of
their products to these customers. Market segments should be large enough or
profitable canters. A segment should be the largest possible homogeneous group
worth pursuing with a tailored marketing program. It will be a fruitless effort to design
products or services, and the company will not be able to achieve desired target or
break even.
4. Differentiable- this refers to the fact that the segments are conceptually
distinguishable (i.e separable from each other) and also respond differently to different
marketing mix elements and programs. For example, married and unmarried women
can respond differently to different products such as dress materials, cosmetics,
household products etc.
5. Actionable- market segments should be seen to be possible to effectively
design marketing programs to serve it, not just designing the programs alone but it
should be implementable. For example, manufacturers of cigarette cannot promote

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their products directly through the various media outlets (television commercials,
newspaper advertisements etc) therefore, they have to device a way to actionably
promote their product.

In conclusion, a sound marketing program starts with the identification and analysis of
the market for a product or service. A market is made up of people with money to
spend, and who are willing to spend it. For most products, the total market is too broad
and heterogeneous for a strategy of market segmentation- that is, developing one
product and one marketing program to reach the entire market. A more effective
strategy is market segmentation; that is, the total market is viewed as several smaller,
but more uniform sub-markets.

1.11.

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1.12. MARKETING ENVIRONMENT

According to Philip Kotler, ‘‘the company’s marketing environment is made up of

the sectors and forces outside the firm’s marketing function which infringe upon
the ability of marketing management to develop and maintain a successful
relationship with the firm’s target audience’’

Managing the exchange process between the firm and its targeted customer segment is
of utmost priority, but it is difficult to carry out this function. Since a firm does not
operate in a vacuum, it needs to take into consideration all its stakeholders,
individuals, organisations that one way or the other affects the firm’s activities.
Marketing environment refers to all the factors and forces that affects a business
organisation’s ability to build and maintain a successful relationship with its
targeted customer segment. In other words, we are considering all the factors that
have an effect on the strategies, policies and decisions of an organisation. In its simple
term, marketing environment is the market situation within which a business entity has
to operate.

Marketing environment is a very important element that must be critically studied and
evaluated before undertaking any business. Since the marketing team in an
organisation is saddled with the responsibility of increasing sales and profitability of
the company through the effective use of the marketing mix elements we discussed
earlier in this class, the inability of the marketing executive to understudy the business
environment by critically analysing the changing trends and strategize and re-
strategize would result to running the firm into unavoidable loss. Thus, a company’s
marketing system must operate within the framework of forces that constitute the
system’s environment. These forces are best classified under external and internal to
the firm. Under the variables that are external to the firm, we could also further
classify them into Micro-environmental forces and Macro-environmental forces.

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A Diagram of dynamic marketing environmental Forces.

MARKETING ENVIRONMENT

Internal External
Environmental environmental
variables Variables

4Ps
Micro-Environmental Forces Macro-Environmental Forces
HR Customers Economic Condition
Suppliers Demographic Forces
R&D Competitors Political Factors
Distributors Legal Forces
Finance Wholesalers Technological Factors
Retailers Ecological Factors
Production Dealers Socio-cultural Factors

1.11 EXTERNAL MARKETING ENVIRONMENT

Consist of micro and macro environmental variables which are external to the firm and
therefore not within the control of the marketing executive.
THE MACRO-ENVIRONMENT

As depicted in the diagram above, the external marketing environment comprises

variables which are referred to as uncontrollable by the firm’s marketing activities.
They are regarded as uncontrollable variables, because they cannot be changed by
marketing executives but rather the marketing executives can only influence them to
their business advantage.

As noted, these are variables which come in the form of constraints and
opportunities to the company. Threats to respond to and opportunities to grab.
Therefore, analysis of marketing environmental variables are critical to the success of
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any business. Any marketing executive that ignores to critically study the changing
trends in their company’s external and internal marketing environmental variables and
take marketing decisions in response to those changing variables in the marketing
environment (both internal and external) does so at his or her company’s perils. These
variables are examined below.

 Economic Condition
A nation’s economic system is a determinant of the inflow and outflow of goods and
services. It influences resource allocation amongst various competing sectors of the
economy and also determines the production pattern within the economy. Marketers
are therefore expected to keep abreast the changing economic indices such as the
varying consumer disposable income level, variation in minimum wages, exchange
rate fluctuations, wage and employment related issues, standard of living of the
populace, varying patterns of cost of living across the nation’s economy, Taxes and a
host of other economic indicators because the economy determines the purchasing
power and disposable income of the consumers. The economic system being practiced
in a country is not a pointer for business survival. That is to say people alone do not
make the market. They must have money to spend and be willing to spend it.

The condition of the economy is a significant force that affects the marketing system
of any organisation- whether business or non-business. For example, it is assumed that
during economic prosperity, consumers have higher purchasing powers and are
therefore more willing to buy goods and services offered into the market. While,
during recessionary economic conditions, consumers have less purchasing power and
are less interested in spending their income on available goods and services. Nations
pass through various economic systems. These vary from subsistence to industrialised
systems. The implications of these stages of economic systems cannot be under
estimated. Other economic variables which can be of interest to marketing executives
include interest rate, money supply, inflation, and credit facilities.

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 Demographic Environment
Here marketers are concerned with the dynamics in demographic data. Demography is
seen as the statistical study of human population and its characteristics-in terms of
distribution. Demographic data is essentially important to marketing managers. This is
because people who have money to spend and the willingness to spend it-make up
what is referred to as market. Marketing managers are also interested in the size and
growth rate of the population in different cities, regions and nations; they are also
interested in age distribution and ethnic variables.

Other variables include educational levels, migration pattern, household patterns and
regional characteristics and movements. Marketing managers should, therefore,
analyse the geographic distribution and demographic composition of the population as
a first step towards understanding the consumer market.

 Social and cultural environment

The society in which people grow up shapes their beliefs, values, and norms (Kotler,
1997). People absorb, almost unconsciously, a world view that defines their
relationship to themselves, to others, to nature and to the universe. The social cultural
environment, really, encompasses the economic, political-legal and technological
variables. People and their socio-cultural customs and beliefs are, fundamentally, what
shape the economy, as well as the political legal system and technology. The impact of
the socio-cultural environment on marketing system is reflected in several sections of
our communities- for example, people’s view on the society.

It should be noted that people vary in their attitudes towards their society. Some define
it, some run it, some take what they can from it, some want to change it, some are
looking for something deeper, while some want to get away from it. Some of the

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important socio-cultural variables that affect marketing activities include-religious

beliefs, the role of marriage, peoples’ feeling and dressing, and societal festivals.

People living in a particular society hold many core beliefs and values that tend to
persist over time. For example, in African culture, it is expected that a younger person
should respect an elderly person. Specifically, a younger person prostrates for an
elderly person in the Yoruba culture. While in Nupe culture, he/she stoops for an
elder. Besides, our mode of dressing also reflects our cultural orientation.

The values held by members of the society will determine what the people want and
how they expect their business to perform, or what social responsibilities business
(executives) should shoulder. For example, pork meat business cannot flourish in
northern Nigeria, because of their religious beliefs. Likewise, suit business would
hardly survive in northern Nigeria due to their cultural orientation. Thus, marketing
managers should be conscious of the variables within the society they operate.

Each society contains subcultures, various groups with shared values emerging from
their special life-experiences or circumstance. To the extent that sub cultural groups
exhibit different wants and consumption behaviour, hence they serve as marketing
opportunity. Marketers sometimes reap unexpected rewards in targeting subcultures.
Although, core values are fairly persistent, cultural swings do take place. Thus,
marketers should have keen interest in sporting cultural shifts that may create new
marketing opportunity or threat.

 Political and legal environment

Marketing decisions are strongly affected by developments in political and legal

environment. The environment is composed of laws, government agencies, pressure
groups, and government policies that influence and limit the affairs of organisations
and individuals. The political environment is determined by the type of government in

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a country and ideology of the ruling party in power. It is the government that dictates
the commercial policy of any country.

Government makes laws to ensure proper operation of business in a country.

Sometimes, these laws also create new business opportunities. For example in Nigeria,
before the coming of the Buhari-led administration tariff on rice importation was lifted
by the then government, thus, creating opportunity for Nigerian businessmen. This is
the reason why marketing managers should, critically, study and evaluate government
policies. However, business legislation has three main purposes namely-

• to protect companies from unfair competition

• to protect consumers from unfair business practices and
• To protect the interests of society from unbridled business behaviour.

Some of the agencies which help to facilitate and implement these laws and policies
are-the Nigerian Custom Service, Nigerian Immigration, and Standard Organisation of
Nigeria, Nigerian Consumer Protection Council, and some others.

The main concern of these business laws is to determine the point at which the costs of
regulations exceed the benefits. The laws are not always administered fairly by those
responsible for enforcing them. Regulators and enforcers may be overzealous and
capricious; the agencies are dominated by lawyers and economists who often lack a
practical sense of how business and marketing work (Kotler, 1997). Although, each
new law may have a legitimate rationale, it may have the unintended effect of sapping
initiative and restraining economic growth. This therefore implies that marketing
managers should have a good working knowledge of the major laws protecting
competition, consumers and society.

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 Technological environment

One of the most dramatic forces shaping people’s lives is technology. Technology has
a tremendous impact on our lives-for instance our life-style; our consumption pattern;
and economic well-being. It also affects the methods of production of goods and
services. Every technology is a force for ‘creative destruction’ (Kotler, 1997). For
example, transistors hurt the vacuum-tube, xerography hurts the carbon-paper business
and autos hurt the railroads and television hurts the print media. Also, advancement in
information technology has brought a lot of opportunities to Nigerians and has also
transformed ways of doing business both within the country and abroad.

Changes in technology is so fast, these days, that ‘appropriate technology’ becomes

difficult to determine, especially for developing nations like Nigeria (Akanbi, 2002).
Companies without a Research and Development(R &D) department are often lost in
the race for growth and profitability. A change today is very fast especially in data
processing and analyses, which have a profound effect on marketing decisions and
activities. That is, new technology creates major long run consequences that are not
always foreseeable.

It should, however, be noted that technological breakthrough are not evenly distributed
across nations. Thus, marketing managers should make effort to monitor new
technologies as a way of protecting their business activities. Kotler (1997) observes
that instead of moving into new business, many old industries fought or ignored them,
and their businesses declined.

 Natural and competitive environment

Nations varies in natural endowments. Some nations are blessed in natural resources;
for instance Nigeria, Saudi-Arabia, Kuwait, etc. are rich in oil. Since these natural

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resources are not evenly distributed, it is expected that marketing managers should
critically study these natural resources as they affect business activities. In virtually all
socio-economic systems, competition is a strong environmental force to reckon with.
People/consumers, generally and basically, want satisfaction in the form of product or
service benefits. Thus, marketing experts should endeavour to study consumers’ needs
and wants, purchasing power, socio-cultural values, competitors’ product/services
offered into the market etc., before producing intended goods and services. Having
discussed macro environment variables, it is essential also to examine the
microenvironment variables. Before you do that, pause and attempt this activity.

MICRO ENVIRONMENTAL VARIABLES

Three environmental variables are directly a part of a company’s marketing system,

but external to the company. These are the firm’s market, suppliers and marketing
intermediaries. They are also classified as non-controllable variables. However, they
can be influenced, to a greater degree, than the macro-variables. A marketing manager,
for example, may be able to exert some pressure on its suppliers or middlemen; and
through its advertisement, a firm will be able to influence her potential and
prospective buyers on the goods and services offered into the market.

1.12 INTERNAL MARKETING ENVIRONMENT

The internal, controllable variable of a company- known as 4ps of marketing or
marketing mix are variables which marketers used to achieve business organisational
goals. They are referred to as controllable variables. This is so because, marketing
managers can manipulate them to suit the situational demands of their products or
services offered. These marketing mixes or the 4ps are briefly discussed below.

Product

A product can be an item, an idea or service. Marketing does not engage in production
activities, but it aids production through market research- to find out consumers’ needs
and wants. Managing the product ingredient includes planning and developing the

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right products and /or services to be marketed by the company. In order to have a
product-set that would satisfy consumers, marketing executives should be able to
develop new products, modify existing ones, eliminate unprofitable products, and add
or subtract from existing product-lines. The work of marketing executives, then, is to
get the right combination of attributes that a product must have to satisfy the
consumers in the target market.

Price
Fixing prices for products is not, solely, the task of marketing executives. They,
however, supply all the necessary information to the management committee that
would decide on the change in price. Consumers are interested in the price change,
because they use it to determine the value of the item bought. Price is often used as the
barometer for measuring the quality of an item, and for comparing different
items/goods. It is a competitive weapon used by companies to create favourable image
for their products.

Thus, price is often regarded as one of the companies’ offering which can stimulate
purchases. While pricing, management should be able to determine the right base price
for their products and services. They should be able to establish policies concerning
discounts, freights payments, and other related price policies.

Promotion

Promotion is, usually, the communication tool employed by marketers to inform

people or the market about availability of products/services offered into the markets or
existence of a particular company. It is a tool through which companies stimulate or
arouse consumers’ demand for the products to be sold; it also helps to educate
consumers on how to use or obtain maximum benefit from the product offered into the
markets. Therefore, promotion is a management strategy used to inform and persuade
the market regarding a company’s products. Advertising, personal selling and sales
promotion are the promotional activities or tools used by companies.

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Distribution/Place

The distribution variable relates to the location of the products in the markets.
Marketing professionals usually has some control or total control over this variable.
Marketing is often responsible for the selection and management of the company’s
intermediaries. The intermediaries include- wholesalers, retailers, dealers, and agents.
It is the responsibility of the marketing department to develop the most potent
marketing mix strategies to achieve the company’s objectives.

Summarily, marketing activities are being carried out in an ever changing environment
whereby marketers have little or no control over these dynamic environmental forces.
As we have seen, the uncontrollable variables in the marketing environment which
marketers have to contend with include but not limited to; technology, competition,
political and legal, environmental forces/variables etc. as they affect marketing
activities. Meanwhile, internal variables such as product, price, place and product are
seen as those within the control of the marketing executives.

In conclusion, Today’s business management is increasingly realising the benefits of

applying the systems concept to marketing. A marketing system is an interacting set of
institutions, activities and flows designed to facilitate exchange transactions between
an organisation and its markets. A company operates its marketing forces within a
framework of ever-changing forces that constitute the system’s environment. Some of
these systems are internal, while some are external to the company. A company’s
success depends on the ability of its management to manage its marketing system in
relations to its internal and external environmental variables.

1.10.

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1.11. PRODUCT CLASSIFICATION

A Product

People defined products differently; some is based on the benefits or satisfaction

derived from it. However, you may like to think, a little deeply, on what is meant by
the word ‘product’. For Philip Kotler, the definition of a product goes way far beyond
being a physical object or a service. He defines a product as anything that can meet a
need or a want. A product is the key marketing mix variable around which all the other
marketing mix variables revolve. It cannot be divested from other marketing mix
variables, because all of them contribute to form the images of the product from the
point of view of the buyers. These images determine the values and satisfactions
expected from a given product and how much the buyers will offer for it. It is
therefore important for manufacturers and marketers to understand what a product
means to consumers and their expectations from that product.

Hence, a product can be described in form of anything like goods, services, ideas,
people, places, and even organisations that are offered for exchange; or a product is
the bundle of benefits or satisfactions offered to a customer. Also, a product is defined
as anything offered or sold for the purpose of satisfying a need or want on both sides
of the exchange process. It includes a tangible object that marketers refer to as a good,
as well as an intangible service (such as ideas, a place, an event, an organisation), or
any combination of tangible objects and intangible services.

Five Product Levels

Philip Kotler (1960) in his book, Marketing Management (15th Edition) developed the
five Product levels model. The five Product levels model basically provides marketers
with a way to show the different levels of needs customers have for a certain product
or service. The model considers that products are a means to an end to meet the
various needs of customer. The model proposed three ways in which customers attach
value to a product:

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1) Customer Need: the lack of a basic requirement.

2) Customer Want: a specific requirement for a product or service to meet a need.
3) Customer Demand: a set of wants plus the desire and ability to pay to have
them satisfied.

It is expected that customers will patronise product based on their perceived value of
the product. The customer usually derives satisfaction if and only if the product’s
actual value meets or exceeds their expectations. Dissatisfaction is met when the
products value falls below or even way out of expectations of the customers.

1. Core Benefit

This is the fundamental need or wants that the customer seeks to satisfy when they buy
and consume the product. For example, in a hotel service business, the core benefit of
the service is to provide a place for guests to have some rest or sleep when away from
home. So the provision of the room is core.

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2. Generic Product

The generic product is a basic component of the product made up of only those
features necessary for it to function. In the hotel service example above, the bed, the
beddings, a bathroom, towels, a mirror, and a wardrobe forms the generic product
offering of the service.

3. Expected Product
Here, marketers prepare an expected product, i.e. a set of attributes and conditions
buyers normally expect when they purchase a product. For example, in a hotel, guests
expect a clean bed, freshly cleaned towels, clean bathrooms, constant power supply,
and relatively quiet environment. In some instance the provision of a Wi-Fi internet
connectivity service is expected.

4. Augmented Product
Marketers are concerned with preparing augmented products that exceeds customer’s
expectations. The augmented product refers to any product variations, extra features,
or services that help differentiate the product from your competitors. For example, a
hotel may have a remote controlled TV set, remote controlled air conditioner, fresh
flowers, etc. provision of a laundry services though at an additional cost to the guest
could also be seen as an augmented product in this regard.

5. Potential Product

This consists of all the possible augmentations and transformations the product may
undergo in the future. In simple terms, this means that to continue to surprise and
delight customers the product must be augmented continuously. This explains the
reason why we have new products in our markets daily due to modifications and
diversifications undertaken by manufacturers. In the hotel example this could mean a
different gift placed in the room each time a customer stays. For example, it could
come in the form of putting sweets in a tray and keep in the rooms for guest, it may

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even come in form of keeping few bottle water in the rooms. By continuing to
augment its product in this way the hotel will continue to delight and surpass the needs
and expectations of their customers.

The Five Products level model by Kotler ultimately helps organizations or enables
them to identify the needs and wants of customers, strive to meet them by strategically
differentiating themselves from their competitors in a way that aligns with the wants
and needs of their customers.

CLASSIFICATIONS OF PRODUCTS
Generally, products are classified into two types, namely- consumer products and
industrial products.

a. Consumer products
Consumer goods are those which are used by ultimate consumers or households and in
such form that they can be used without further commercial processing. Consumer
goods can further be classified according to the amount of efforts consumers are
willing to expend for purchases and the extent of their preferences for such products
and services. Thus, consumer goods can be divided into:

 Convenience goods
 Shopping goods
 Specialty goods
 Unsought goods.
b. Convenience products/goods

These are standardised products and services, usually, of low unit values that
consumers wish to buy immediately needs arise and with little buying efforts. That is,
goods which consumers, generally, purchase frequently with little effort. The purchase
is almost spontaneous, and the person has already a predetermined brand in mind.
These convenience goods include soaps, newspapers, toothpastes, toiletries, cigarettes

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etc. Often, convenience goods are bought impulsively or spontaneously. For example,
when a person goes shopping around and sees a product which attracts his attention,
he buys it on impulse. Such goods are not purchased on regular basis.

c. Shopping goods

These are goods which are purchased after going around shops and comparing the
different alternatives offered by different manufacturers and retailers. In other words,
these are durable items with differentiated product attributes that consumers wish to
compare in order to be able to find the most suited for their needs before buying. In
this case, emphasis on quality, price, fashion, style and so on, is of great importance.
They therefore have to be marketed differently; examples of such goods are clothing,
household appliances, furniture and others.

d. Specialty goods

These are products that consumers insist on having. The buyers are willing to wait
until the right products are available before they buy them. Consumers have either
developed special tastes or liking for such goods. Specialty products are usually
specific branded items, rather than product categories. They are specific products
which have passed the brand preference stage and reached the brand insistence stage.
Examples of these are cars, jewelleries, fashion clothing, photocopy machines,
cameras etc. They are usually very costly items and include luxury items.

e. Unsought goods

These are goods that people do not seek for either because they did not plan ahead to
buy them or they did not know about their existence before seeing them on display, at
the point of purchase. Most new, recently introduced products fall into this class.

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Therefore, aggressive and continuous promotion is considered pertinent. Examples of

unsought products include life insurance, encyclopaedia, and blood donation to the
Red Cross Society.

MARKETING STRATEGIES FOR CONSUMER AND INDUSTRIAL

PRODUCTS

Industrial products are generally subject to greater standardisation, as against certain

consumer products which require frequent changes in fashion and style. Advertising,
normally, is an important promotional tool for consumer products, but may not be so
in the case of industrial products. Personal selling and after-sales service is, generally,
more important for industrial products. Industrial products generally involve high
value purchases and this involves competitive bidding based on price competition.
Selling is done on the basis of quality or tangible attributes.

Consumer products are, very often, sold for psychological satisfaction. For example,
in case of adverts of soaps, Lux soap is touted as capable of offering you a complexion
like that of a film star. Consumer products require elaborate channels of distribution,
but industrial products are sold through fewer outlets and often directly by the
organisation itself. These are some of the salient features of marketing of consumer
products as against industrial products.

CONCLUSION
The study of consumer products is considered important, most especially in the
competitive world we have found ourselves. Basic understanding of their class helps
to shape consumers’ consumption and as well as meeting the objective of profit
making.

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Self-assessment questions
1. Give reasons why marketing mix is referred to as controllable variables.
2. Suggest reasons why you think demographic variables are important to the
marketing executives.
3. List and explain briefly the macro environment variables.
4. Give three reasons why business regulations are made.
5. List five important socio-cultural variables that affect marketing activities and
briefly explain them.
6. Identify the features that characterised each stage in the product life cycle
development.
7. Using any company of your choice, identify and explain some of the green
marketing practices adopted by the company.
REFERENCES & RECOMMENDED FURTHER READING

Akanbi, I. A. (2002). Fundamentals of Marketing. Kaduna: Ayokunle Printers

Limited.

Armstrong, G. & Kotler, P. (1994). Principles of Marketing. (6th ed.) New Jersey:
Paramount Communications Company.

Hermann, R. O. (1970). “Consumerism, its Goals, Organisation and Future”.

Journal of Marketing.

Kotler, P. (1997). Marketing Management-Analysis, Planning, Implementation and

Control. (9th Ed.). New Jersey. A Simon and Schuster Company.

Kotler, P. (1972). “What Consumerism Means to Marketers” .Harvard Business

Review.

Malakooti, B. (2013). Operations and Production Systems with Multiple

Objectives.

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John Wiley & Sons. CC BY-SA 4.0

Stanton, W. J. (1981). Fundamentals of Marketing. Japan: McGraw Hills

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