ENT421(MARKETING MANAGEMENT AND ENTREPRENEURSHIP) BY JACOBI

CHAPTER 1
ELEMENTS OF PRODUCTION

MEANING OF PRODUCTION

Production involves the creation of goods and provision to satisfy human wants, such as in:

(a) Industry, e.g. manufacturing,agriculture, mining, consruction etc.

(b) Commerce e.g. trading, banking, insurance etc.
(c) Services, e.g. teaching, medical services, hairdressing etc.

A Product: A product is any good or service that has being transformed out of basic
combination of the factors of production, it is also refers to as the result of production or an
output.

FACTORS OF PRODUCTIION

(1) LAND: land refers mainly to the resource provided by nature. e.g. soil, sunshine, rain
e.t.c.

The rewards for land is called Rent.

CHARACTERISTICS OF LAND

(1) It is completely immobile

(2) It is fixed in supply
(3) It is the free gift of nature
(4) Its value with its location
(5) It is liable to law diminishing returns.

(2) LABOUR: Labour is the actual effort both physical and mental made by human being in
production for a reward.
The quality of labour refers to whether labour is skilled, semi-skilled or unskilled; it
refers to the degree in which labour has being trained.
The rewards for labour is wages or salaries.
Quantity of labour : this refer to the total number of working class population of a nation.

(3) CAPITAL: refers to the store or supply of goods used for d production of futher goods. (pls let's
take note, capital does nt necessarily mean money but when it is capital it is liquid capital).
 It is also refers to to goods not wanted directly for their own sake, but for the
contribution they make to the production of both consumer goods and producer goods.
Consumer goods are goods which directly satisfy consumer wants and are in the hands
of the consumer, e.g. a loaf of bread, a table, e.t.c.
Producer goods are goods used for further production. e.g. capital is a consumer goods
such as machinery, factory buildings, raw materials e.t.c.

TYPES OF CAPITAL

fixed capital : this involves all those goods which are very durable especially producer good which do
not change their form after production. such as machinery and factory buildings.

Social capital: this includes facilities like roads ,school, hospitals and other social amenities own by the
community.

Circulating capital : These are goods that are needed regularly for production and which change their
form after production. e.g. raw materials like palm oil, cassava e.t.c.

Liquid capital: This are money put aside for production purposes

IMPORTANCE OF CAPITAL

(a) It increase production

(b) It increase leisure and standard of living
(c) It improve upon the efficiency of the other factors of production.
(d) People can b released to produce more goods (it requires fewer workers)

CAPITAL CREATION/FORMATION OR ACCUMULATION

Capital creation or accumulation means having more capitals like machines, tools, irrigation dam ,e.t.c.
It should be noted that capital does not necessarily means money. So when we talk about capital
creation it means buying more producer goods than consumer goods. Producer goods are those goods
that are used for the production of other goods and consumer goods are meant for ultimate and
immediate consumption. Now, talking about creating capital, it means that an enterprise should not
focus moreo consumer goods which might put the business in a pathetic state in future terms, but
should invest and acquire more producer goods in other to ensure d continuous running of the business.

When capital is created, the reward is always very pleasant - attainment of a higher standard of living.

CAPITAL CONSUMPTION
This is the failure to replace worn out capital. In this case, the enterprise starts producing and
consuming capital goods. The reward for capital consumption is very unpleasant - poorer standard of
living in the nearest future.

ENTREPRENEURSHIP OR ENTERPRISES

Meaning: is the combination of the other factors of production in production and the acceptance of the
risks of production which arise through uncertainty.

Entrepreneurship is the process of establishing and managing a business with the aim of making profits.
In the process of doing this, there is combination of the other three factors of production and
acceptance of risk and uncertainties which the market might bring.

ENTERPRENEUR

Is the person or group of person who decides what to produce and who combines the other factors of
production to produce what he has been decided on.

Functions of entrepreneurship

1.uncertainty of risk bearing

2. Decision taking

3. Management control

4. Provision of capital.

CHAPETR 2
MARKETING MIX

Marketing mix is the set of tools that is used to pursue the marketing objective in the target
market kotler(1997). The primary objective of marketing is the satisfaction of consumer. To
achieve this goals a marketing manager must develop and implement a strategy on effective
combination of wants satisfying features to consumer. This involves the decision made on
certain ingredients or tools , which refers to as the variable of the marketing mix . This
marketing mix components were previously broken down into 4Ps which are

Product ,price, place and promotion.

These component are referred to as the marketing mix decision variable.

 (1) PRODUCT VARIABLE: This is the most basic marketing mix tool, it refers to the nature of the
physical goods and services to be offered in terms of size, shape , packaging, engineering
features e.t.c.
(2) PRICE VARIBLE: price is the critical marketing tools and it is refers to as the value consumers
place on a particular product.
The importance of price to marketers lies in the fact it is the most fleXible element of the
marketing mix.
(3) PLACE VARIBLE : Place otherwise referred to as the distribution in another key marketing mix
tool.
(4) PROMOTION VARIBLE: It involves all the activities a company undertakes to communicate or
inform the target market about a company and it’s product.

The 4ps of marketing can be extended to 7ps inclusive with people, process and physical
evidence

(5) PEOPLE : This refers to those involved in the process of producing and distributing the product i.e
the staff of d company.
(6) PROCESS: This element of marketing mix deals with quality control. Like how can this product
satisfy consumer's want? Should we make the packaging brightly colored? Will this flavour be
accepted by majority of the consumers?. This are questions relating to the process.
(7) PHYSICAL EVIDENCE :This is the environment in which distribution takes place.

THE ENVIRONMENT OF MARKETING

This comprises of those forces which influence directly or indirectly the operation of the
marketing system. It is known that a marketing cannot Operate in a vacuum rather it exist in an
environment that have previously existed before it. The environment consist of variables that affects
marketing system positively or negatively.

The environment of marketing is divided into two:

1. The internal environment (The internal environment consists of controllable variables. This means
that marketing managers can determine d way it affects d system to some extent and this variables
includes the 4Ps of marketing mix-Product, price, place, and promotion)

2. The external environment (This contains variables that cannot be controlled by marketing managers.
They includes factors that exist outside d organization that have influences it's operations.

These factors includes: Political factor, economic, natural, technology, competitors, demography,
social and cultural factors).
CHAPTER 3
MARKET AND MARKET SEGMENTATION

Market according to layman is a place where buyers and sellers meet to transact business .

TYPES OF MARKET

1. CONSUMER MARKET: these are groups of people that buys goods and services for personal
consumption. They are also called ultimate consumers.

2. INDUSTRIAL MARKET: these are groups of buyers who buys for sake of continuing their business
operations. The goods they buy are used for further production of other goods. it is also called business
market. This set of people can b divided into two :

The producer market: those that use it for further production.

The resellers market: those that do not touch d product but resell it.

Differences between consumer and industrial market

(1) Number of buyers: . Consumer market has larger number of buyers than the industrial market
(2) Size of buyers: Each buyers in the industrial market is usually larger than each buyers in the
consumer market.
(3) Buying procedure: The industrial market are more systematic in their buying than d consumer
market.
(4) Time allocation to purchases: The industrial market spends a lot of time before buying due to
budget issues compared to consumer market.
(5) Range of purchase: Ultimate consumer spread all their buying skills over a wide range of
products whereas the industrial buyers have more opportunity of perfecting purchase skills.
(6) Industry market relationship: There is closer relationship with d producer and d buyer in
industrial market than in consumer market
(7) Nature of Demand: The demand for industrial market are derived from the demand of the
consumer goods. Demand for industrial goods is more volatile than that of consumer goods.

MARKET SEGMENTATION: Is a group of buyers who share qualities that make the
segment distinct and which have marketing significance . The process of dividing market
into meaningful relatively and similar and identifiable segment or group is called market
segmentation.

STRATEGIES FOR MARKET SEGMENTATION

(1) Concentration marketing: It involves a marketer directing all his marketing effort towards a
single market segment by creating and maintaining one mix
 (2) Differentiated marking: It involves then marketer trying to appeal to several market segment by
developing a marketing mix for each selected segment.

(3) Market atomization: It is premised on the belief that each consumer is unique in respect of
identified characteristics, hence he is treated an individual

CRITERIA FOR SUCCESSFUL SEGMENTATION

There are certain things you must consider to ensure the success of a market segment.

1. Measurability (The people that form the segment must be identifiable)

2. Sustainability (This means that a market segment must contain a meaningful number of potential
buyers)

3. Accessibility (This means the people that form d market segment must be reachable)

4. Responsiveness (The consumers that forms d market segment must respond always to the company's
programme) just like feedback .

BASES OGF SEGMENTATION

A. GEOGRAPHICAL SEGMENTATION: It involves geographical variables such as climate, natural

resources, and population.
B. DEMOGRAPHICAL SEGMENTATION: It examine aggregate population characteristics such as
distributionof age and sex,income, occupation, education e.t.c.
C. PSHYCHOGRAPHICAL SEGMENTATION: It involves the use of pshychographic variable such as
personality, lifestyle, motives e.t.c.
D. PRODUCT USAGE SEGMENTATION: This exist where a market is divided based on the amount
of product purchased or consumed.
E. BENEFIT SEGMENTTION: This is the group of consumer according to different benefit sought
from the products.

STEPS IN SEGMENTING A MARKET

1. Select a market or product category for study.
2. Choose a basis for segmentation
3. Select segmentation descriptors
4. Profit and analyse markets
5. Select target markets
6. Design, implement, and maintain appropriate marketing mix.
.
 CHAPETER 4
PRODUCTION DECISION

WHAT IS A PRODUCT

Alderson(1957) define A product is a bundle of utilities consisting of various product features and
accompanying services. This definition is so because a product must be able to satisfy consumer's wants.
A product can be tangible or intangible

CLASSIFICATION OF PRODUCTS

1. Consumer product: This product is meant for final consumption by ultimate users

2. Industrial products: They are used in the commercial production that is the production of other
goods.

CLASSIFYING CONSUMER PRODUCT

1. Durables and Non-durables: durables are product that can last long (their life expectancy is not short)
e.g radio, t.v, cars etc Non durables have limited life span e.g bread, fish etc

2. Perishable and Non-perishable: perishable products cannot be preserved for a long time while Non-
perishable product can be preserved for a long period of time.

3. Luxury products and need products: luxury product are meant to satisfy d fantasies of consumer, they
re not necessarily needed for daily survival while need product are necessary for day-to-day living

4. Convenience product: These are products that can be gotten easily without much stress. They re
usually non-durable. These type of product don’t need promotion.

5. Shopping product: These products are usually more expensive Than convenience products. they
cannot be gotten anywhere but in specific places and more time and efforts is spent by consumers to
get these products. Shopping products can be classified into two namely:

i) Homogeneous shopping products: These are shopping products which consumer perceive as being
similar e.g. refrigerator, television e.t.c.

ii) Heterogeneous shopping product: : These are shopping products which consumer perceived as being
different from one another e.g. furniture, clothing, universities, e.t.c.

6. Specialty products: These products possess certain special characteristics. They are different in
branding. E. G television has so many brands.

7. Unsought products: Consumers do not realize that they need this product unless d need arise. They
do not think of buying it e.g. mortuary. Most new products are classified as unsought products
8. Emergency products: These are products that are needed in cases of emergencies e.g umbrella, first
aid box etc.

PRODUCTS MIX DECISIONS

In order to achieve its marketing objective a firm must make decision on its product where it offers
more than one product to the market . It must understand the relationship that exist among the
products in order to b able to co-ordinate their marketing effectively. As a result, the concepts which
describe products relationship should be understand.

1.product mix: This is the set of all products and items that a particular seller offers for sale. It is refers
to as product assortment.

2. product line: This is a group of closely related product offers by an organization.

3.product item: This is a complete version of a product that can designated as a distinct of offering
among an organization’s product.

4..product width: The width of a product refers to how many different product line the company
carries.

5. product depth: The depth o0f a company’s product mix refers to the number of product item present
in a product line.

6. product length: The length of a company product mix refers to the total number of product items in a
particular mix.

7.product mix consistency: refers to the extent to which product lines are similar in terms of end use,
distribution, outlets used, target market and or price range.

PRODUCT DEVELOPMENT

It refer to as the creation and adjustment of goods and services to satisfy consumers demands

It can be in 3 ways:

1. development of completely new product

2. Improving on existing product

3. Determine of new uses of existing product.

PROCESS OF PRODUCT DEVELOPMENT

The process of developing a new product is divided into 7 stages

1. Idea generation: This is when the idea for a particular product just comes in the producers mind .

2. Idea evaluation: Since the idea can't just be transformed into product, it has to be screened to ensure
that it is acceptable in d market.

3. Concept testing: this is d stage in which d idea is brought to d notice of few consumers in other to get
their initial reaction

4. Business analysis: In this stage, analysis is based on how the product can bring gain or profit to the
producer

5. Product development & testing: At this stage the product is finally created in this stage) and tested in
d lab to ensure that it is appropriate for people 2 consume.

6. Market testing: in this stage The product is given to some set of consumer to get their reactions, if it
satisfies consumer want or not

7. Modification stage: The result gotten from these Stage would be used to determine what things the
producer should add or remove

8. Commercialization: In these stage the product is finally launched into the market.

THE PRODUCT ADOPTION PROCESS

Adoption according to Kotler(1997) is an individual’s decision to become a regular use of a product.

Product adoption means accepting a product to b regular used by a consumer. Before the product is
finally chosen by a buyer the following 5 stages are required.

1. Awareness: the buyer becomes aware of d new product but lack information about it.

2. Interest : The buyer seeks to get more information about d product.

3. Evaluation: The buyer consider the benefit and determine whether to try it.

4. Trial: The buyer examines, test, and tries , the product to determine its usefulness.

5. Adoption: The buyer begins to use the product when the need for this general type of product arises
again.
FACTORS INFLUENCING THE ADOPTION PROCESS

1. Difference in adoption
2. Personal influence
3. Characteristics of the innovation
4. Variation in organizations rate of adoption.

PRODUCT LIFE CYCLE

The product life cycle portrays the life of products in the market. the life cycle of a product is the period
of time a product has to spend in d market.

The product life cycle involves 4 stages

1. Introduction stage : This is when the product newly launch into the market.

2. Growth stage: These stage involve rapid rise in sales and profit, increase completion, product
differentiation and brand promotion.

3. Maturity stage: This stage consist of: (a)early maturity(increased sale at decreasing rate ),
(b)saturation(the product reaches its peak in d market) and (c) late maturity stage (where other brands
come up and start competition).

4. Decline stage : This stage start when a product can no longer survive its maturity stage, it becomes
less of d market choice.

PRODUCT FAILURES

Product failure occur when a product dies at infancy without passing through the growth and maturity
stages such product are said to have died prematurely.

This is caused by the following

1. product defects

2. High cost of production

3. Competition

4. Poor timing

5. Inefficient distribution (when middle men and channels of distribution is weak)

6. Inadequate promotion

7. Inadequate sale forces

8. Inadequate market analysis.

CHAPETR 5
BRANDING AND PACKAGING DECISIONS

Branding and packing are two decision areas that have gained prominence in the marketing worlds just
because they have created room for product identification and differentiation and an opportunity for
marketer to do business.

MEANING OF BRANDING :

Branding is the use of distinctive name/ or mark on a product to differentiate it from similar
competitive product, it is the major tool used by marketers to distinguished their product from
competitor’s products.

TERMS IN BRANDING DECISION

1. A brand is a name , term, symbol, design or combination thereof that identifies a seller’s
product and differentiate them from competitor’s products.
2. A brand name is the part of a brand that c an be spoken including letters (GM, SR, BMW),
words(Chevrolet, coca-cola,), and numbers( 504, 7up, 777).
3. A brand mark comprises of the elements of a brand that cannot be spoken because it it not
made up of words but rather it is a symbol or design. E.g chevron sign, symbol of mercedes
Benz.
4. A trade mark is a legal term indicating the owner’s exclusive right to use the brand or part of
the brand, and law from using it without permission prohibits that others. E.g 7up- the
difference is clear.
5. A trade name is the full and legal name of an organization such as Nigeria Bottling Company
Plc, Okin Biscuits Limited rather than the name of a specific product.

BRANDING DECISIONS

The marketing managers have d special task of making decisions concerning branding.

Generic branding: This is when a firm decides to brand or not.

Manufactures brand: This is branding done directly by the manufacturers of the product)
Private brands: This is branding done by the retailers or resellers rather than the manufacturer they
are also referred to as store brand or distributor's brand.

Family brand: this is when a firm uses one name for all its product especially for those firms that
produce several goods. E.g sony, Panasonic, dangote, e.t.c.

Individual brands: this is when d firm uses different name for its products.

QUALITIES OF A GOOD BRAND

1. Easy to recognize

2. It should be short, simple and easy to spell, call or recall

3. It should be distinctive

4. It should not portray negative things

5. It should b easy to pronounce

6. It should b available to use

7. it must suggest something about the product, it’s uses, characteristic, or quality of action

8. it should be adaptable to promotion.

PACKAGING

Packaging according to Kotler(1997) includes the activities of designing and producing the container or
wrapper for a products .Packaging is the process designing a container for a product. Packaging is in
three layers:

1. Primary package: This is the material immediately next to d content. It serves as protector of d product

2. Secondary package: the material next to the primary package

3. Shipping package: This is d package to make shipping/distribution of d product possible.

REASON FOR PACKAGING

1. Protection
2. Differentiation
3. Identification
 4. Ease of handling
5. Convenience use
6. Improvement of sales
7. Information.

QUALITIES OF A GOOD PACKAGING

1. It should attract the attention of the consumers
2. It must adequately describe the product’s features
3. It must create consumer’s confidence.
4. It must create a favourable overall impression in the consumer.
PACKAGING CONSIDERATIONS

Before packaging some things have to b considered:

1. Cost (the packaging must not b too costly compared to d product)

2 Protection. It must ensure proper protection

3. Size: The size of d package would b in line with d product. It should not b too bigger

4. Competitors factor

5. Legal factor (it must follow d rules of the regulatory bodies of d nation)

CHAPTER 6
PRICING DECISIONS

PRICING OBJECTIVES

Pricing objective are overall goals that describe what the firm want to achieve through its pricing
objective. Pricing are set to meet both Short term and long term goals, Short-term goals relate to
survival while long run pricing derived directly from company objectives. They provide guidance to
decision makers on determine price policies, formulating Princes strategies and setting actual price.

Most companies have profits as main pricing objective, other objectives such as market share,
competition, high return on investment e.t c. May b more important to the other companies. In other
instance, a marketer may use multiple pricing objectives and these include:

1. Survival: A fundamental pricing objective is survival. No firm can continue operation without survival

2. Profit: This objective is associated with the objective of the organization. Many organization have
profit maximization as their objectives .
3. Target return investment: This objective is closely related to the pricing objective. It involves setting
a price with particular percentage over what is the amount if investment.

4. Market share: This objective is particularly common in large firms within a competitive industry
where sales and market shares are equated with profit.

5. Status quo objective: Status quo objectives are set when organization is satisfied with its current
market position and sales.

6. Cash- flow objectives: when there is a need for an organization to recover cash as fast as possible,
pricing objective will be to prove cash flow.

7. Product quality objective: A company with the record if product high quality leadership in the
industry will required a high price to cover the high product quality and the high cost of research and
development.

8. Composition: Meeting or keeping out competitors is an important pricing objective

PRICING STRATEGY

After setting pricing objectives the next decision a marketing manager must make is on price strategy.

A pricing strategy is a plan or course of actions for achieving pricing objectives. Pricing strategy form

an important component of all overall marketing strategy and they determine the role of price in the
marketing mix. There are a lot of strategies open to a marketer in his effort to achieve marketing
objectives. These include:

1. Penetration strategy: price penetration strategy is a typical pioneer pricing strategy adopted mostly
at all introduction or a new products , and in other instances, at the saturation and product
decline .Price Penetration sets as price below the prices of competing brands to gain access or penetrate
a market and generate a larger unit sales volume as the product is getting accepted, price is gradually
increased. Price penetration strategy is mostly applicable under the following conditions:

a. When the demand for a product is highly elastic

b. Where the price for a production can be kept low especially through large- scale production

c. Where the marker fears strong competition shortly after introducing the product to the market.

d. Where there is no adequate high-income market to support the skim-the - cream technique.

2.Skimming strategy: This is another type of pioneer pricing strategy it is the opposite of the
Penetration strategy. It refers to the product coming into the market with a high price to skim up the
market, and make maximum profit before competitors start to come in. Price skimming strategy is most
applicable under the following conditions:
a. When the life if the product Is expected to be short .

b. When the quality of product is high

c. When a firm has a limited production capacity at the introduction of a new product, a skimming price
can be use to keep demand in lime with the firms production capacities.

3. Psychological pricing: This pricing strategy is designed to encourage purchase that are based on
emotional reactions rather than on rational responses .it is mostly in use at retail level and seldom used
for organizational products. It can be inform of odd even pricing. Prestige pricing. Customary pricing ,
price lining, and pricing based con attractiveness of number.

i. Odd-Even pricing: this assumes that more of a product will be sold at #99.89 than #100 .

ii. Prestige pricing: this involves setting prices at an artificially high level to provide prestige or a quality
image.

iii. Customary pricing: customer pricing ensures that certain products are priced on the basis of tradition.
This is to say that for a long time the price of a particular product remains constant and unchanged.

iv. Pricing lining: This strategy emphasizes that setting of a limited number of prices for selected lines or
groups of merchandise.

4. Professional pricing: people like doctor, lawyers etc. Who have skill or experience in a particular field,
adopt professional-'pricing strategy.

5. Promotional pricing: promotional Pricing strategy strategy operates when price and promotion as
two as two elements of the marketing mix are merged together to form a strategy i.e when pricing
strategy is promoted oriented. Examples include

I. Pricing leaders: A product often sold below its usual profit margin. Near cost or even below cost is
termed a price leader.

ii. Special event pricing : Special event pricing is carried out to increase sales volume by coordinating
price and advertising or sales promotion fort seasonal or special occasions.

iii. Superficial discounting: This is sometimes referred to as " fictitious comparative pricing, which gives
customers the impression that a product is sold at a discount.

PR ICING METHODS

After deciding on the pricing strategy a marketer must choose s pricing method which is a mechanical
procedure for setting prices on a regular basis.Price are also set through individual negotiations that do
not involve any formal and price making mechanism. Which are:
1. Cost- plus - pricing: This is the most common price determination procedure. It involves making a cost
estimate for a product and adding a margin to cover marketing cost and then a percentage to provide a
gross margin.i.e Total Cost= fixed cost + variable cost

where profit desired is 20% of the total cost

Then total cost = Total cost + profit

2. Mark- Up pricing: This is the middlemen's version of manufacturer's cost-plus pricing. The
middlemen add a mark up to the cost of purchase to get the selling price. The mark - up is however
influenced by stock turn over competition, and manufacturer's suggested resale price. Mark- price can
be stated as a percentage of cost or a percentage of selling price.

Mark - up as a percentage of cost= mark-up/Cost x 100

3. Break Even Analysis: This method of pricing identifies the sales level at which total revenue (TR) will
equal to total cost ( TC) given a product's per unit selling price.

The break- even point in unit is represented by :

Break even point = Total fixed Cost / price- variable cost per unit

Where TC=TR

i.e . FC+VC=PxQ

Where: TC= Total cost

TR= Total revenue

FC= Fixed cost

VC= Variable cost

P= Price

Q= Quantity.

4. Competition Oriented pricing : Competition oriented pricing strategy considers Competitors prices
while costs and revenue consideration are secondary. Competition oriented pricing is simply to use and
it involves increases store traffic. This strategy is most appropriate:

i. Where Competition product are almost homogeneous

ii. Where the organization is serving market in which price is the key of the marketing strategy.

iii. Where an organization's pricing objective is to increase sales or market share.

FACTORS INFLUENCING PRICING

pricing decision making may not be as easy as one think because of it's position within the marketing
system. There are also interested parties within the system who my reach to price in different ways. As a
result certain considerations are made before deciding on a price at which a product is offered for sale.
Those factors can be grouped into two.

1.INTERNAL FACTORS: Which consists of cost and maketing controllable which are products, price,
place, and promotion.

2. EXTERNAL FACTORS: Which consists of competitors price, buyer's behavior, economic climate,
governmental regulation etc.

1.Cost: This is a basic factors commonly affecting price setting and it tends to be over emphasized by
many marketers. The following are to considered under costs

I. Cost concepts (fixed cost and variable cost)

ii .Nature of cost ( accuracy and adequacy of production costs and cost of accounting purposes)

iii. Break even computations.

2. Stage of the product in it's life cycles: This often affects marking management's pricing decision as
each stage is characterized by different pricing strategies in response to the situation in the market. For
example, at the pioneering stage, pricing can be set high(to skim up the market) or low ( to achieve
market penetration). At other instances non-price competition may prevail.

3. Product Differentiation: the amount of different ion among competing products and the relative
importance of such difference to prospective buyers may also affect pricing if such products.

4. Product price Elasticity of demand : price Elasticity is defined as the relative sensitivity of a product
sales volume to change in price. It therefore implies that when a product has a price inelastic demand,
it's marker has little incentive to cut the price since sales revenue per unit product deceased more
rapidly than unit sales increase.

5. Size of market: the size of market and concentration of a market may also affect pricing decision.

6 Distribution strategy

7. Promotion strategy
8. Competition

9. Buyers psychology and behavior

10. Legal and regulatory issues

DISCOUNT CONÇEPTS

Discount and allowances: Discount and allowances are reductions from list of prices they enable
marketers to adjust their actual prices without changing their published prices. In assigning a discount
program, marketers must answer some questions which include?

a. Who are the customers? i.e who is eligible for the discount

b. What will be included ? i.e customer purchase requirements

c. What is the discount schedule? i.e the size of the discount

d. What form does the discount take? i.e dis can be price or non- price such as lower delivery charges or
special credit terms.

Types of discounts

1. QUALITY DISCOUNTS: are discounts offered to encourage customers to remain loyal buyers or to
place larger orders.

2. TRADE DISCOUNTS: A trade or functional discounts is a reduction off the price that a manufacturer
gives to an intermediary for performing certain functions such as selling , transporting, Storting e.t.c

3. CASH DISCOUNTS : a cash discount is a reduction in the list price that rewards customers for paying
their bills promptly or within a stated period.

4. ALLOWANCES: an Allowance is a concession in price offered by a group of sellers to a buyer usually

to boost sales.

5. SESSIONAL DISCOUNT: A seasonal discount is a price reduction offered to buyers that buy goods or
services out of season.