MARKETING E-NOTE

1ST TERM YEAR 11

FIRST TERM WORK SCHEME

Weeks/Topic
1-2. Distribution:
3-4. Transportation:
5. Transportation cont.
6. Documents used in transportation
7. Documents Used in Transportation Cont. (means of payment)
8. Trade:

9. Trade Cont.
10. Revision
11/12. Examination

WEEK ONE
TOPIC: DISTRIBUTION
SUB TOPICS:
a. Meaning of distribution.
 b. Types of distribution.
c. Causes of consumers dissatisfaction and solutions.
d. Methods of distribution: direct and indirect distribution

MEANING: Distribution is the process of making a product or service

available for use or consumption by a producer.
TYPES OF DISTRIBUTION:
There are three types of distribution, these include:
1. Intensive distribution: Here, the product is sold to as many
appropriate retailers or wholesalers as possible. The types of
product involves are: chewing gum, candy bars, soft drinks, bread,
film and cigarettes where the primary factor influencing the
purchase decision is convenience. The industrial products that may
require intensive distribution include pencils, paperclips,
transparent tape, file folders, typing paper, screws and nails.
2. Selective distribution: In selective distribution, the number of
outlets that may carry a product is limited, but not to the extent of
exclusive dealing. By carefully selecting wholesalers or retailer, the
manufacturer can concentrate on potential profitable accounts and
develop solid working relationships to ensure that the product is
properly merchandised. It also involves the use of few
intermediaries in a given territory; it is associated with shopping
goods.
3. Exclusive distribution: When a single outlet is given an exclusive
franchise to sell the product in a geographic area, the arrangement
is referred to as exclusive distribution.
CAUSES OF CUSTOMER DISSATISFACTION:
Some causes of customer dissatisfaction include the following:
1. Poor service delivery by the company
2. Fraudulent practices by staff
3. Inadequate packing space
4. Slow response to customers’ request
5. Poor product quality which cannot meet the needs of the
customers
6. Bad behavior of staff
7. Harmful effects of the product
8. Inaccessible business location

CHANNELS OF DISTRIBUTION
What is a Distribution Channel?
A distribution channel is a chain of businesses or intermediaries
through which a good or service passes until it reaches the final
buyer or the end consumer.
It also refers to the various stages or channels through which
finished goods are moved from the manufacturers or producers
to the final consumers. More so, it refers to the path through
which goods move from the producers to the final consumers.
They help to cover a vast geographical area and also bring
efficiency in distribution including transportation and
warehousing. Retailers and Wholesalers are the common
channels of distribution.
Channels of distribution provide convenience to customer, who
can get various items at one store. If there were no channels of
distribution, customer would have faced a lot of difficulties.
Consider the following two diagrams:
A Customer wants to purchase toothpaste, salt and wheat.
Functions of Distribution Channels:
Following are the main functions performed by the
distribution channels:
1. Sorting: Middlemen obtain the supplies of goods from
various suppliers and sort them out into similar groups on the
basis of size, quality etc.
2. Accumulation: In order to ensure a continuous supply of
goods, middlemen maintain a large volume of stock.
3. Allocation: It involves packing of the sorted goods into small
marketable lots like 1Kg, 500 gms, 250 gms etc.
 4. Assortment: Middlemen obtain a variety of goods from
different manufacturers and provide them to the customers in the
combination desired by them. For example, rice from red bull,
tomatoes, lake rice etc.
5. Product Promotion: Sales promotional activities are mostly
performed by the producer but sometimes middlemen also
participate in these activities like special displays, discounts etc.
6. Negotiation: Middlemen negotiate the price, quality,
guarantee and other related matters about a product with the
producer as well as customer.
7. Risk Taking: Middlemen have to bear the risk of distribution
like risk from damage or spoilage of goods etc. when the goods
are transported from one place to another.

Assignment
1. Enumerate ten products under the intensive distribution, ten
under selective and five under exclusive.
2. State other four functions of distribution channels. (NOT THE
ONES ALREADY MENTIONED)

WEEK 2
TOPIC: DISTRIBUTION
Sub-topics:
a. Types of distribution channels.
b. Method of direct channel and indirect
c. Forms of direct and indirect channels
d. Factors Determining Choice of Channels of Distribution:

Types of Distribution Channels;

Broadly, Channels of distribution are of two type’s viz., (1) Direct
Channel (2) Indirect Channel.
1. Direct Channel or Zero Level Channels:
When the producer or the manufacturer directly sells the goods to the
customers without involving any middlemen, it is known as direct
channel or zero level channel. It is the simplest and the shortest mode of
distribution. Selling through post, internet or door-to-door selling etc.
are the examples of this channel. For example, McDonalds, Bata, Mail
order etc.
Methods of Direct Channel
(a) Door to door selling
(b) Internet selling
(c) Mail order selling
(d) Company owned retail outlets
(e) Telemarketing
2. Indirect Channels:
When a manufacturer or a producer employs one or more middlemen to
distribute goods, it is known as indirect channel.
Forms of indirect channels
(a) Manufacturer-Retailer-Consumer (One Level Channel):
This channel involves the use of one middleman i.e. retailer who in turn
sells them to the ultimate customers. It is usually adopted for specialist
goods. For example Tata sells its cars through company approved
retailers.
Manufacturer→ Retailer→ Consumer
(b) Manufacturer-Wholesaler-Retailer-Customer (Two level
channels):
Under this channel, wholesaler and retailer act as a link between the
manufacturer and the customer. This is the most commonly used
channel for distributing goods like soap, rice, wheat, clothes etc.
Manufacturer→ Wholesaler→ Retailer→ Customer
(c) Manufacturer-Agent-Wholesaler-Retailer-Consumer (Three
level channels):
This level comprises of three middlemen i.e. agent, wholesaler and the
retailer. The manufacturers supply the goods to their agents who in turn
supply them to wholesalers and retailers. This level is usually used when
a manufacturer deal in limited products and yet wants to cover a wide
market.
Manufacturer → Agent → Wholesaler → Retailer → Consumer

Factors Determining Choice of Channels of Distribution:

Following are the main factors, which help in determining the
channels of distribution:
1. Product Related Factors:
Following are the important product related considerations in deciding
on channels of distribution:
(a) Nature of Product:
In case of industrial goods like CT scan machine, short channels like
zero level channel or first level channel should be preferred because
they are usually technical, expensive, made to order and purchased by
few buyers. Consumer goods Iike, refrigerator can be distributed
through long channels as they are less expensive, not technical and
frequently purchased.
(b) Perishable and Non- Perishable Products:
Perishable products like fruits or vegetables are distributed through short
channels while non- perishable products like soaps, oils, sugar, salt etc.
require longer channels.
(c) Value of Product:
In case of products having low unit value such as groceries, long
channels are preferred while those with high unit value such as diamond
jewelry short channels are used.
(d) Product Complexity:
Short channels are preferred for technically complex goods like
industrial or engineering products like machinery, generators like
torches while non-complex or simple ones can be distributed through
long channels.
2. Company Characteristics:
Following are the main Company Characteristics affecting choice of
channel of distribution:
(a) Financial Strength:
The companies having huge funds at their disposal go for direct
distribution. Those without such funds go for indirect channels.
(b) Control:
Short channels are used if management wants greater control on the
channel members otherwise a company can go in for longer channels.

3. Competitive Factors:
Policies and channels selected by the competitors also affect the choice
of channels. A company has to decide whether to adopt the same
channel as that of its competitor or choose another one. For example, if
Nokia has selected a particular channel say Big Bazaars for sale of their
handsets, other firms like Samsung and LG have also selected similar
channels.
4. Market Factors:
Following are the important market factors affecting choice of channel
of distribution:
(a) Size of Market:
If the number of customers is small like in case of industrial goods,
short channels are preferred while if the number of customers is high as
in case of convenience goods, long channels are used.
(b) Geographical Concentration:
Generally, long channels are used if the consumers are widely spread
while if they are concentrated in a small place, short channels can be
used.
(c) Quantity Purchased:
Long channels are used in case the size of order is small while in case of
large orders, direct channel may be used.
5. Environmental Factor:
Economic factors such as economic conditions and legal regulations
also play a vital role in selecting channels of distribution. For example,
in a depressed economy, generally shorter channels are selected for
distribution.

Evaluation:
 1. What are the two types of channels of distribution?
2. Mention four methods of direct channels.
3. Define indirect distribution channel.
4. State the three forms of indirect channels.
5. State five factors that influence the choice of distribution
channel

ASSIGNMENT
1. Illustrate graphically, the channel of distribution for the
following goods
a. Tractor
b. Tomato and pepper
c. Refrigerator
2. What are other factors influencing the choice of
distribution channels? List and explain five from YOUR
TEXTBOOK.

WEEK 3

TOPICS: A. DISTRIBUTION CONT.

B. TRANSPORTATION
SUB-TOPICS:
A.DISTRIBUTION CONT.
i. Functions of retailer to consumers
ii. Functions of wholesaler to producers
iii. Factors that influence the choice of distributive channels.

B.TRANSPORTATION –
i. Meaning
ii. Importance of transportation in marketing

SPECIFIC OBJECTIVES: By the end of the lesson, students should

be able to:
1. Identify at least five functions retailer performs to consumer.
2. Highlight five wholesaler functions to the producer.
3. List and explain five factors the affect the choice of distribution
channels.
4. Define transportation.
5. State at least five importance of transportation in marketing.

FUNCTIONS OF RETAILER: TO CONSUMERS

1. Maintaining close relationship with customers thereby knowing
what the customers’ want
2. Engaging in standardization and grading of goods in a manner
accepted to customer.
3. Informing customers about new products in the market
4. Engaging in delivery of goods to customer
5. Performing storing function by stocking goods for consumers
6. Selling goods directly to consumers
 7. Educating consumers on the use of new products
8. Rendering home services to consumers
9. Offering varieties of products to consumers

FUNCTIONS OF WHOLESALER: TO PRODUCERS

1. Helping producers to distribute their goods
2. Providing marketing research support to producers
3. Providing warehouse facilities
4. Purchasing in large quantities thereby reducing total physical
distribution cost
5. Providing feedback on market trends to producers
6. Providing information on competitors’ activities to the producers
7. Advertising goods for the producers
8. Reducing potential losses to the producers by assuming risks.
Summary of factors affecting the choice of distributive channels.
Marketing environmental factors such as economic, socio-cultural,
political, technological etc. also determine choice of channel to be used.

MEANING OF TRANSPORTATION
Transportation is the movement of goods and people from one location
to another. It may also refer as a system for moving goods or passengers
from one place to another. More so, it involves the movement of goods
from the place of production to the place of consumption.

IMPORTANCE OF TRANSPORTATION IN MARKETING:

The importance of transportation includes the following:
1. Availability of raw materials: transportation helps in conveying the
raw materials from one place to another.
2. Availability of goods to customers: The finished goods are
transported from the manufacturer to the consumer through different
modes of transportation example: roads, rail, air and water.
3. Transportation helps in mass production: This includes both
purchase and distribution of finished goods in large quantities.
4. Mobility of labour and capital: This helps the smooth or easy
movement of capital and labour from one place to another.
5. Stabilization of prices: The movement of goods from one place to
another leads to balance between demand and supply, which stabilize
the prices of goods in the market.
6. Physical supply of products: Transportation helps in transporting
raw materials to the factories where production takes place. And the
supply of finished goods to the customers.

Class Evaluation:
1. Mention five retailer’s functions to the consumer
2. How is the wholesaler helpful to the producer
3. State five factors the can affect the choice of distribution channel
4. What is transportation?
5. Why is transportation important in business?
 ASSIGNMENT
1. Explain 5 roles of transportation to the economic development
of your country
2. State four ways the consumer can be helpful to the retailer,
wholesaler and the producer.

PRE-READ ON THE MODES OF TRANSPORTATION

WEEK 4
TOPIC: TRANSPORTATION CONT.

MODES OF TRANSPORTATION AND THEIR

ADVANTAGES AND DISADVANTAGES
There are basically four major modes of transportation.
1.     Land
2.     Air
3.     Pipeline
4.     Water
 
 LAND: Transport by land is a means whereby people and goods are
moved from one location to another through land.  It is divided into road
and rail.
  
i) Road transport involves the use of motor carriers, trailers, buses,
motor cycles, bicycles, beast of burden (animals), etc. to move goods
and people from place to place. It is the commonest means of
transportation.
Advantages:
a.      It is flexible and the reason why it is the most
popular in West Africa.
b.     Goods and passengers can be collected and delivered
on the way outside their parks.
c.      Road transport does not require special routes like
trains and airplanes.
Etc.
         Disadvantages:
a.      The rate at which accidents occur is high.
b.     Holdup and congestions delay movement of goods
and passengers.
c.      It is not good for Fragile goods.
       Etc.
ii)  Rail transport is the use of trains to move people and goods from
one place to another. Train has its special route; it does not move
on ordinary ground. The special iron tracks on which trains move are
known as railway lines. Trains are divided into passenger trains and
cargo trains.
  Advantages:
a.      Trains carry bulky goods than motor vehicles.
b.     Train fares are cheaper than motor vehicles.
c.      Accidents are common in train transport.
Etc.
                       Disadvantages:
a.      Transport by train is not flexible like road transport.
It does not provide door-to-door service.
b.      Trains are not suitable for carrying perishable goods
especially on long distances.
c.      The maintenance cost of trains and their lines are
high.
Etc.  
 
iv) AIR transportation: This is the movement of passengers
and goods through air with the help of aeroplane.
Advantages:
a.      Air transport is the fastest means of transport.
b.     It is the most suitable for transporting perishable
goods.
c.      Accidents are not common.
Etc.
                       Disadvantages:
a.      Air transport fare is very expensive.
b.     It is not flexible because it operates on schedule.
c.      Its operation is influenced by weather, which brings
about flight cancellation.
Etc.
iii) PIPELINE: This is a means of transporting liquid goods
for example, oil (petroleum), gas, etc. through pipelines
under the ground. It can also be used to carry water from
dams to homes.
Advantages:
a.      Pipelines require little maintenance.
b.     It is a safe means of transporting liquids.
c.       Pipelines can be constructed on any type of land
and sea.
Etc.
                          Disadvantages:
a.      It carries only liquid so it is not flexible.
b.     Pipelines take up a lot of land space.
c.      The oil can be easily taped illegally.
d.     When damaged, it can bring about a lot of
destruction of life and properties.
 
Class evaluation

1. Differentiate between air transport and road transport

2. Which modes of transportation is suited for the
transportation of the following commodities?
a. Fruits and vegetables
b. Electronics
c. Petroleum/fuel

ASSIGNMENT:
Enumerate four OTHER merits and demerits of ROAD,
RAIL AIR and PIPELINE transportation.
(NOTE: Not the already mentioned ones)

PRE-READ ON WATER TRANSPORTATION

WEEK 5
TOPIC: TRANSPORTATION CONT.
SUB-TOPIC: Water transportation and factors affecting the
choice of transportation mode

 
MEANING OF WATER TRANSPORTATION
Water transportation: transport by water is a means whereby
people and goods are moved from one place to another through
water. It facilitates international trade because it makes the
movement of goods especially bulky and heavy ones from one
country to another. It is divided into two, National or internal
or inland water transport and international water transport.  
a.      National or internal or Inland water transport: This
involves movement of  passengers and goods within a country's
border through rivers, canals, creeks and lakes.   
Types of national or inland means of water transport are:
Canoes, Engine boats, Launches, and Ferryboats
 
b.     International or seawater transport: this involves movement of
passengers and goods across national boundaries through oceans
and seas. It links two or more counties together.
Types of international means of water transport are;
  Ocean liners: These ships sail through high seas and oceans in all
continents of the world. They are designed for high-speed trans-ocean
travels. It is divided into two.
a. Passenger liners – these are ocean liners, which conveys
people from one place to another through route. They are
luxurious, give maximum pleasure to passengers, and
normally move on schedule.
b. Cargo liners – these are ships, which carry heavy and bulky
goods from one location to another on high seas and oceans
through a specific rout or schedule. 
2. Tramp liners: these are referred to as cargo water taxis     because
they carry cargoes from wherever they are found and leave when they
have sufficient cargoes. They do not have a specific route, schedule and
fixed charges. They are smaller than ocean liners.
3. Coaster liners: these are ships used to convey goods along the coast
to the main port. They are also referred to as lighters and tugs and are
suitable for carrying raw materials.
4. Special purpose ships: these are ships specially built for particular
cargoes eg. Tanker ships are used to convey crude oil.
  Advantages:
a.      It is cheaper in long distances than air transport.
b.     It is the most suitable means of transport for carrying bulky
and heavy goods.
c.      Luxurious facilities like swimming pools, cinemas,
theatres, etc are provided for passengers.
Etc.
                            Disadvantages:
 a.      Transport by water is very slow especially at long
distances.
b.     It is faced with dangers like sea storms.
c.      It is very expensive to acquire a ship.
Etc.
 
FACTORS AFFECTING THE CHOICE OF
TRANSPORTATION MODE:
1.     Cost: The cost of transportation is important in choosing a
particular mode. If the cost is very expensive it will affect the
selling price of the product.
2.     Distance: The distance to be covered is another consideration
in choosing a mode of transportation. E.g. Air transportation  is
preferable for long-distance journeys
3.     Flexibility of a mode of transportation is also important in
choosing the transportation mode. E.g. Road transportation is
more flexible than other modes of transportation. Motor parks are
everywhere.
4.     Bulkiness: Bulkiness of the goods  is a factor in choosing
transportation mode. Water transport is more preferred than other
modes of transportation for bulky and heavy goods.
5.     Nature of goods: Fragile and perishable goods are considered
when choosing mode of transportation.
6.     Weather condition: The weather condition of a particular area
and at a particular time will influence the choice of transportation
 7.     Safety and security
Etc. 

Evaluation:
1) Explain water transportation.
2) Mention the two types of water transport.
3) Differentiate between the two types
4) State four types of international means of water transport.
5) Mention five factors affecting the choice of transportation
mode:

ASSIGNMENT
State four advantages of water transport over road
transport

WEEK 6
TOPIC: TRANSPORTATION CONT.
SUB-TOPIC: Documents used in transportation
 i. Meaning and functions of bill of lading, consignment note, airway bill, packing
list, etc.
ii. Terminologies used

1.Meaning of bill of lading and function:

It is a document of title giving the holder a right to take possession of
the goods to which it refers. It is the most important document when
goods are sent by ship.
It is issued by the shipping company    
functions of bill of lading:
i. It acts as an advisory note indicating the quantity and description of
     

goods sent by a named ship

ii. It is a receipt of goods in good condition on board, signed by the
     

master of the ship. Any damage to goods is noted

iii. It is evidence of a contract of carriage between the shipper and the
   

ship owner
iv. When delivery of goods has taken place, all other copies of the bill of
    

lading are rendered invalid

v. It is a document of title; hence it can be used as a basis for negotiating
      

for a letter of credit from the bank.

2.Consignment note/delivery note:
This is normally prepared by the sender of goods by road/rail
transport company or a freight forwarder.
Functions of consignment note:
i. It is a receipt for goods and document for delivery
        
 ii. It is also a note for freight charges
     

iii. It is evidence of a contract of carriage but is not negotiable

   

iv. It is an advice note, indicating the quantity and description of goods

    

being dispatched on a certain date by the named road or rail transport

agency.
3.Air bill or Air consignment note:
It is a document made out by the sender (consignor) of goods whenever
goods are sent by air. An airway bill is issued by an airline company in a
set of 12 copies in which only three copies are original.

Functions of air bill:

i. It is an evidence note indicating all the key information stated.
        

ii. It is evidence of contract of carriage but not negotiable.

     

iii. It may be used as a receipt to be signed by the consignee on the

   

delivery of the goods.

iv. It is also a note for freight charges
    

4.Packing list and weight note:

These documents are used to show the gross weight and net weight of
goods.They must agree with what is stated in other relevant documents
such as the bill of lading.
Functions of packing list:
 It serves as a verification of important information of the goods shipped
or transported by road haulage such as gross and net weight of the
goods, details of the packaging, description of the goods as agreed upon
in the contract of sale between the importer and exporter.
5.Manifest: This is a document which shows a full list of the cargo carried
by a ship or aircraft. This document is to be completed by the captain of
the ship and kept with the customs authorities, showing the particulars
of the ship, cargo and destination.  
6.Certificate of insurance: This is a document which shows that a
document has been insured against risk or loss by the exporter.
 
TERMINOLOGIES
These are systems of specialized terms used in foreign trade.
a) Freight: this is the term used for the cost of shipping a particular cargo
            

for a specific voyage.

b) Dead freight: This is the freight paid on unoccupied space in the ship.
           

If there is any space left in a ship, the person who charters must pay for
the space not used.
c) Demurrage: This is a fine or penalty which a charterer of a ship pays to
            

the owner of the ship when he exceeds the agreed period of return.
d) Demise charter: this is the form of charter party whereby the charterer
           

of the ship makes all the arrangements for working it such that, for the
period of charter it is owned by him.  
CLASS Evaluation
1. What is bill of lading?
2. Differentiate between consignment note and air way bill.
3. What are the functions of packing list and weight note?
4. Explain a manifest.
5. State five terminologies used in foreign trade

ASSIGNMENT
List other four documents used in transportation

WEEK 7
TOPIC: DOCUMENTS USED IN TRANSPORTATION CONT.
         (MEANS OF PAYMENT)
SUB-TOPICS:
i. Documentary credit
        

ii. Bill of exchange

     

iii. Types of bill of exchange

   

iv. Others e.g charter

    

1. Documentary credit: it is a method of payment or financing

  

foreign trade where the importer opens a credit at a bank in favour

 of the exporter in his country. The importer in favour of the
exporter then draws a documentary bill.
2. Insurance certificate: this is a certificate that shows that the
  

importer has paid for insurance to protect him against risk. It is

compulsory that goods are insured before they are exported in a
ship.
3. Bill of exchange: This is an unconditional order in writing
  

addressed by one person to another and signed by the person to

whom it is addressed to pay on demand or at  fixed demandable
future time, a sum setting in money to the order of a specific
person. Bill of exchange may be inland or foreign.
             
Types of bill of exchange
a) Inland bill of exchange: this is used and circulates within a
           

country (home trade).

b) Foreign bill of exchange: this is used in setting debts in
          

international trade between one trader in a country and

another country.
 
There are sally four parties to a bill of exchange;
1.The Drawer: this is the person who writes the bill for the
amount being owed him.
2.The Drawee: this is also known as the acceptor. It is the
person on whom the bill is drawn for acceptance.
3.The Payee: this is the person to whom money stated on the
bill is payable.
 4.The Endorser: this is the person who signs the bill when its
ownership is to be transferred.   
 
Charter:
 This is someone who hires a ship or plane for a specific purpose.
 
Charter party:
         Charter party is a contract whereby a ship or aircraft is
temporally leased by the owner to another person or firm purposely to
transport cargoes from one place to another. The charterer must pay a
cargo called charter party freight. It may be for a definite journey or
period. The name of the ship and freight must be specified.
Types of charter:
1.Time charter: This is the hiring of a ship for an agreed period rather
than hiring for a particular voyage. That is, the ship is chartered for a
specific period eg. 3 months, 5 months etc. 
2.Voyage charter: This is a contract whereby the owner of the ship hires
it for a specific voyage rather than a specific period. Eg Lagos to
Calaba.

Class Evaluation:
1. Differentiate between documentary credit and bill of exchange.
2. State the two types of bill of exchange.
3. Who is a charter?
4. Mention and explain the two types of charter.
ASSIGNMENT
State any other three means of payment

WEEK 8
TOPIC: TRADE
SUB-TOPICS:
i. Meaning
ii. Types
iii. Features of home trade

MEANING OF TRADE AND TYPES OF TRADE

Trade is the act of buying and selling of goods and services. People
trade with the aim of making profit in order to cater for their needs.

TYPES OF TRADE

There are two main types of trade these include:

1. INTERNAL TRADE/HOME TRADE:

Internal trade or home trade refers to exchange of goods
and services among the people within a particular country.
Example, Nigeria home trade involves goods and services
that are produced and sold locally within the country.
 2. FOREIGN TRADE/INTERNATIONAL TRADE: This involves
operating across a number of foreign country markets. It is also
refers to the exchange of goods and services between two or more
countries of the world. It is the exchange of goods and services
across borders or territories.
DIAGRAM SHOWING THE DIVISION OF TRADE

Trade

Home trade foreign trade

Retail wholesale import export entrepot

TYPES OF TRADE

(1) Home /Local/Internal/Domestic Trade

(2)Foreign/external/International Trade
(3)Entre-port

1. Home /Local/Internal/Domestic Trade: This is the buying and

selling of goods and services within a country. Buying of goods and
services that take place in from Lagos to Port Harcourt, Onitsha and Aba
is home trade. It is within Nigeria.
Type of Home /Local/Internal/Domestic Trade
i. Retail Trade: Retail trade is when the retailer buys goods in small
quantity from the wholesaler or the manufacturer and sells them in bits
to the final user (consumer).

ii. Wholesale Trade

This is trade in which the purchaser buys goods in bulk or large quantity
from the producer or
Manufacturer and sells in small quantity to the retailer.

2. Foreign/external/International Trade
Foreign trade is buying and selling of goods and services involving
countries of the world. Foreign trade is the exchange, buying and selling
of goods and services between two or more countries. When Nigeria
sells crude oil and gas to Japan, China or the United Kingdom, it is
international trade.

Types of Foreign/external/International Trade

i. Export trade: This is the selling of goods and services produced
in one country (Say Nigeria) to other countries.

ii. Import trade: This is when businessmen in Nigeria buy goods

from foreign countries for the purpose of selling them within the
country. Whether goods are bought from overseas by
individuals, governments, schools or business organisations,
import has taken place. Items such as electronics, video games,
computers, motor vehicles and machines are imported from other
countries.
 iii. Entre-port: This is the re-selling of imported goods by one
country to another without changing or transforming the goods.
Entre-port is also known as re-exporting. For example a
businessman imports computers games from Japan to Nigeria,
instead of selling them in Nigeria; he sends them to Ghana where
he is paid in foreign currency. It is called entre-port.

Class Evaluation:
1. What is trade?
2. Differentiate between the following
a. Import
b. Export
c. Entre-port

ASSIGNMENT
State five differences between wholesale trade and retail trade

WEEK 9
TOPIC: TRADE CONT.
SUB-TOPIC:
a. Relationship between home and foreign trade
b. Differences between home and foreign trade
c. Importance of foreign trade
d. Basis for international trade
e. Features of international trade
RELATIONSHIP BETWEEN HOME AND FOREIGN TRADE
1. Currency is the medium of exchange. Maybe local or foreign
currency.
2. Profit is the motive behind any form of trade.
3. Revenue is earned for the government.
4. Warehouses are used to keep goods.
5. Middlemen are involved in the trading activities.
6. Trade leads to economic growth.
7. The needs or wants of consumers are met. 
DIFFERENCES BETWEEN HOME AND FOREIGN TRADE

S/N Home Trade Foreign Trade

1 The same language is used Language used by traders as

as a medium of means communication may be
communication among the same or different. E.g.
traders E.g. Lagos – Aba Nigeria – USA or Nigeria –
China or Germany

2. Trading activities are done Trading activities are done

in the same country between two countries or among
countries.

3. The same money or Different money or currency is

 currency is the medium of the medium of exchange. E.g.
exchange. E.g. Naira and Nigeria( Naira) – USA (Dollars)
kobo

4. There are no barriers to There are many barriers to free

free trading activities. trading activities

5 Trading activities is Government regulation is

subject to government restricted to one country.
regulation

6 The climate and weather The climate and weather

condition is the same E.g. condition is the same E.g.
Rainy and dry season Winter, Summer, Spring and
Autumn

7. The revenue earned is in The revenue earned is in foreign

local currency currency

8. The risk involved is The risk involved is high

minimal

9. The political situation is The political situation is not the

the same. same.

10. The culture is the same The culture is different

 11 It meets the needs of the It leads to comparative
consumer. advantages for the exporting
nation.

12. Factors of production are Factors of production are not

freely used and sometimes freely used and restricted based
moved e.g. Labour, on the Law and government
capital, and entrepreneur regulation. e.g. Labour, capital,
and entrepreneur

 
IMPORTANCE OF INTERNATIONAL TRADE:  
i. Sources of revenue, taxes can be imposed on imported and export
         

goods
ii. Provision of employment, foreign investors can establish firms in
       

sister countries which creates employment opportunities for its citizens.

iii.  It leads to international specialization, countries can become
     

specialized in the  production of goods for which they  have

comparative cost advantage  over       others
iv. It fosters closer international relationships, foreign trade leads to
      

peace in the world.

v. Increase in standard of living, since there is exchange of different
       

goods and services among countries, the standard of living increase.

  
BASIS OR REASONS FOR INTERNATIONAL TRADE
i. Economies of scale: expanding size of and scope of market help to
      

achieve economies
ii. Growth and profitability: many companies turn to global markets
      

for growth, which can broaden their customer base, sales and revenue
iii. Risks diversification: many companies move worldwide so that
      

they can diversify, selling products in numerous countries reduces the

company’s exposure to economic as well as political instability within
the country
iv. Resources and ideas; due to unavailability of resources in
        

domestic countries, companies turn into global markets, and also to

collect different ideas in the different lifestyles of various countries as
well as to broaden their workforce.
v. Desire to improve the living standard: countries engage in
      

foreign trade in order to improve the standard of living of their people.

 
FEATURES OF INTERNATIONAL TRADE:
i. Economic: International marketing activities are favoured by
           

appropriate economic environments. The secured economic

environment could be judged by the international marketer through
some market characteristics such as population, income, consumption
pattern, infrastructures, geography and attitudes toward foreign
investments
 ii.
    Political/legal: The political environment is an important part in
           

business decisions. Laws and regulations passed by either local, regional

and central government bodies can affect foreign firms operations.
iii. Social: The social environment encompasses religious aspects,
   

language, customs, traditions and  beliefs, taste and preferences’, social

stratification, social institution, buying and consumption habits etc.
iv. Financial: The international marketer should make a careful
     

analysis of the financial environment, since this area faces several risks.
v. Demographic : Here, size of population, population growth rates,
        

age composition, family size, nature of the family, income levels etc.
have very significant implications for business, because it determines
the demand for a product.

Evaluation:
1. What is international trade?
2. Differentiate between internal trade and home trade
3. What will you consider as a major hindrances to foreign
trade
4. What benefit is accrued to the Nigeria economy in the
course of trading with China?

END OF TERM