*A customer is the person who buys the product and can sell it back but doesn’t consume it

*The consumer is the final person to use the product, they consume it.

Concepts of market and marketing *Market-any situation that brings buyers and sellers together to purchase and sell goods (tangible) and services (in-tangible) either directly or indirectly -Direct; the exchange of goods and services is in a well defined area such as local street or retail store -Indirect; the market is less defined (not in a physical place) and can occur through use of telephone, the internet

Functions of a market -To establish a link in the chain of supply between seller and the buyer [to form a link between suppliers and sellers]

Types of market -There are two types; industrial and consumer

Consumer market-market for products, goods and services bought particularly by individuals. Many types of goods make up the consumer market. These goods are: a) consumer non-durables-purchased quickly,sold and repurchased quickly and doesn’t last long (Fresh-fruits, vegetables) b)consumer durables-it isn’t bought frequently and long lasting, has a high unit value (cars, washing machine) c) soft goods (longer lasting than fast-moving goods but are replaced more frequently than consumer durables) (Clothes, shoes) d) services-one business is providing service for the consumer (Car repair, plumbing)

Industrial market:involves the sale of goods between businesses. These are goods aimed at other businesses as opposed to the general public consumers. (National bakery selling goods to supermarkets) a) capital goods: finished goods needed over a long period of time (machinery, vehicles, computers) b) consumable products: goods bought frequently such as those for resale or raw materials c) services: provided by specialists such as logistics (transportation), security systems, recruiting agencies (one business is providing service for another business)

Marketing -all the processes involved in getting the right product to the right customer at the right price and at the right place in a profitable and efficient way *New trends such as social media marketing and integrated marketing have created a marked addition to the marketing techniques

Social media marketing (SMM) refers to the process of gaining attention through social media sites such as; twitter, YouTube and Facebook. The aim of SMM is to produce content that appeals to users with advertising, which increases the brand exposure and wider customer reach. This aids market research by: a. getting feedback from users or potential users of products b. building email marketing lists c. improving brand recognition d. identifying potential buyers

For example a market could use SMM in the following ways: A) inviting users to provide reviews and enter contests B) offer incentives to encourage users to provide information about themself

Integrated Market-unified approach to communication in marketing (using different approaches at the same time to spread information) eg: direct management and social media etc.. It ensures all messages and communications are consistent to employees

Marketing activities Market research Pricing Packaging Branding Sales promotion Advertising Distribution Market research: gathering information about what consumers are buying or what potential customers are likely to buy Three broad aims; To find out what customers want To predict future demands to avoid over producing To discover what will influence consumers (product name, audience, colour of packaging and hidden persuaders *Hidden persuaders-make the product look attractive without pointing it out (the chips company doesn’t tell you the bag is big but you see the large bag and it persuades you) +Consumer taste Places like flow can put internet and cable in a bundle to be offered claiming it’s cheaper than buying them separate to appeal to customers

+Competition Businesses are affected by competition, if another business produces the same goods as another it would influence price (they would try and make it cheap to attract consumers) and you’d need to ensure quality is comparable if not better

+Consumer behavior Refers to the way consumers choose products and services. It is important when creating a marketing plan. Their behavior is influenced by price, product quality, preference, emotions and attitudes Pricing Identifying the right price that will encourage sales. There are different types:

Cost-plus-you add on to the cost price hence the “plus”, so you sell it a for more to make a profit (you buy the good for $10 but sell it for $15) [adding overheads to arrive at selling price]

Market-based- firms base their prices on what their competitors are charging (especially when they’re the market leader or has the largest market share) Eg: national bakery, yummy and birdy are all competitors but national bakery is the Market leader so the rest would base their prices off of it whether to make it higher or lower than it

Promotional-firms lower their prices short term to attract more customers Eg: 2 for 1 price deals

Skimming price- setting a high price for a new product especially one that is very different from those of competitors (since it’s different people would be attracted to it regardless of price or want to try it)

Psychological- setting price based on consumers’ expectations for this quality product (consumers will not think the product is low quality if it has a high price but if it has a low price people will think it’s low quality)

Penetration-setting a low price for a new product (usually food which tastes good)

Odd pricing- setting the price at $19.99 instead of $20 (makes the product seem cheaper due to the $0.1 difference attacking one’s psyche but it’s the same price)

Packaging -Creating suitable outer wrapping or container for a product. Packaging should not only be attractive but should present details about the contents, potential hazards, correct methods of usage etc..

Packaging should; -Promotes the product -Enhances the appearance of product -Protect the product -Helps prevent health hazards -Makes it more convenient for the consumer to handle

Types of packaging -Plastic (bags, containers, wrappers) -Boxes -Bottles -Paper (bags) -Glass -Cardboard -Cans Branding -differentiating the product of a company from other brands and establishing loyal customers [gives the business its unique identifier] Should include: -A significant registered name/term/symbol/design that is easily recognized and identified -A registered name that is for exclusive use if the company that has registered it Sales promotion -short term methods used to encourage consumers or potential customers to buy during a specific period Examples -Point of sales display (behind the cashier you see new product displays), -Promotional pricing (discount vouchers, free gifts, loyalty cards) Advertising Advertisements are messages paid by those who send them (advertisers), that sum to inform the people who receive them (prospective customers) The functions of advertising are: 1.Introduce new products and services

2. persuade consumers to buy
3. highlight the unique features of a product or service
4. create a firm’s image in relation to its products or service
5. draw attention to special events, such as sales and concessions
6. increase demand and thereby market share
7. educate consumers about products, services and issues e.g. health issues

*There are different types of advertising:

Informative; gives detailed information about goods and services and leaves customers to decide, without persuasion, whether or not to purchase [ads that tell you about a birth control contraceptive outlining its benefits and disadvantages and ads telling you about medication with its side effects and uses]

Persuasive; a variety of techniques are used to persuade customers to purchase regardless of whether they need it or not [make it seem like they can’t love without the good]

Hidden persuaders are used, such as: -Sex appeal -Ambition -Personality appeal -Social acceptability -health Distribution Methods used to make the product available to consumers. This is using a distribution channel for example, wholesale, retail or internet. Producer->wholesaler->retailer->consumer Producer->wholesaler->consumer Producer->retailer->consumer Producer->consumer Eg: National bakery-Mr. Ming wholesale-corner shop-consumer *The wholesaler and retailer are known as intermediaries

Intermediaries-can be used by producers or manufactures to distribute products to consumers

There are factors that influence methods of distribution and how products are distributed such as: Who the product is for ;how you distribute it to the upper class is different from how you’d do it to the lower class. For example China would distribute goods faster to the U.S than other countries so they may use a plane for the U.S and a cargo ship to other countries Type of product ;fragile products need to be packaged properly and indicate that the products are fragile as opposed to regular products that don’t need as much care Value of the product ;if the product is highly valuable (diamonds) they’d need to be secured in an armored truck to be distributed to the location

;if it isn’t as valuable, then not much if any security is needed, just a heavy duty vehicle that can manage the products Geographical location ;Based on where the person is located certain modes of transportation can’t be used. For example if you’re distributing something from St.Ann to Hanover you would get use a plane, you’d have to use a heavy duty truck Technical factors ;Delivery trucks may brake down so this needs to be taken into consideration when transporting goods (you can’t promise the consumer a due date and not factor in mishaps on the road) Scope of retailer ;whatever is being distributed is needed by retailers to prevent waste of time (you need to ensure the consumers want what’s being sold, because it doesn’t make sense to waste resources to transport only 2 goods a long distance)

Marketing mix Includes the 4P’s Product-make sure there’s a demand and people want it Price-the different price strategies and methods of payment, set price at one people will buy Place-where people can see and purchase the product (website, physical place), somewhere that’s convenient making people want to go Promotion-advertising goods and showcasing them

+Advertising-to send a paid message that a product is on the market

+Promotion- to showcase a product usually at a low price or as a deal

Factors that influence consumer behavior The following factors will cause consumers to either increase or decrease their demand for a product: -Price of commodity [^price, decrease in demand], opposite too

-Prices if other goods and services (substitutes and complements)

-Income of consumers [^ income ^ demand], opposite too

-Tastes and preferences [people will buy a good because people are buying it and it’s trendy so ^ in demand] [if I prefer a particular good I’ll continue to buy it and ^ demand]

-Brand loyalty [the demand for a good doesn’t change whether the price increase or decreases, a decrease can lead to me buying more]

-Spending patterns- (You demand more toiletries during mid month and more food items during the end of month. Mid month your demand for food items would be decreased since you don’t buy it at this time and your demand for toiletries would increase since you buy a lot during this time of month)

-Expectations of future rise in price

-Changes in size of population [^population, ^ demand], the opposite too (a decrease in population can be due to migration)

Factors affecting packaging and presentation of goods -Packaging refers to designing and producing the container that holds the product. -A good package must identify, protect and advertise the product. -It must also make the product convenient to use. Eg: milk is best suited in a bottle to be poured out and toothpaste is best suited in a tube to be squeezed out -A package must sell the product, first attract the customer to buy and provide information on the product, price, name and address of manufacturer and instructions as well as brand Branding -A brand is any identifiable feature of a product which makes it different from its competitor. A brand may be a name, term, symbol, design or combination of these. -Examples of brand names include: Avon and Colgate. A brand symbol e.g.

represents the Nike brand. *A branded product will increase the value of the product in the eye of the consumer.

Methods of promoting sales -Includes all forms of advertising, public relations and sales promotion -Advertising is the paid presentation of goods or services through the media for the purpose of encouraging consumer patronage.

The media refers to Television Radio Magazines Newspaper *Websites Purpose of advertising -to attract attention -to inform customers -to increase sales

Sales Promotion -a marketing strategy that is used to induce customers to buy immediately Eg: Sale on items Bargain packs (“two for one”) Coupons (the holder of the coupon gets a discount on items bought) Games (guessing riddles to receive a free good) Contests (purchasers may receive a prize if they win) Trading stamps (These are given to purchases with each item bought. Booklets filled with these stamps may be returned by customers for goods, services or money in exchange) *A loss-leader [is a product that is in high demand and is therefore used to attract consumers to a business location by cutting its price very low. The business uses a loss leader to attract large number of persons to its location so that other items will be sold. The profits lost on this product will be made up on the high sales turnover of the other products that will be bought along with the loss-leader.]

Public relations -aimed at creating a favorable impression of a business in the eyes of the public (its suppliers, the government and the surrounding community) Eg: to sponsor local sporting events, donations to charity (Grace Kennedy sponsoring ISSA) Eg: playing a broadcast about the company to attract customers in a community

Techniques of selling -methods used to sell products more effectively by focusing on each customer’s personal needs. These include: Personal Selling After-sale services such as warranty and installation Merchandising Good Customer Relations

Personal selling Through use of a sales person to present and sell goods and services of a firm directly to a specific audience. They demonstrate the use pf products etc.. and provide firm with feedback After Sales Services Services customers are entitled to after purchasing goods. They are free and encourage the customer to buy it. (Installation, after calls to check in on the good working) Merchandizing Eg: serving yourself at the gas station Creates a more comfortable environment where people can serve themselves and feel in-charge Good customer relations -Building good relationships with customers, ensuring they’re satisfied and remembering repeat customers -Staff must be trained well to deal with people, and be helpful and polite

Terms of Sale -a business may offer its customers various terms to settle accounts Cash -preferred by most businesses because it’s more liquid and can be readily spent. They usually offer a lower payment for goods bought in cash Credit -Customers receive goods without paying and after receiving the goods they are allowed to pay at intervals over a short- term, usually one to three months to settle outstanding balances. Hire Purchase -a long term payment plan with interest(eg: 24-36 months) after you’ve made a deposit, if you don’t pay it by then, you get charged additional money on your balance Hire purchase vs lay away Hire purchase- pay a deposit get the product and then pay monthly installments *Lay away- you pay for a good in increments and when done you get the good Cash Discount A reduction in the price of the good that is paid immediately and is for a short time (given if you pay the bill before a due date) Trade Discount A trade discount is the reduction in the price of a good given by a manufacturer to a retailer to allow the retailer to make a profit or to encourage bulk buying.

Consumer organization Consumerism is the education and protection of consumers to prevent their exploitation -overcharging -offering poor quality goods and services -short measurements and weights

-Consumerism is practised by various groups in the economy: the government, private institutions, and private firms.

Consumerism practiced by the government -This is done through various government agencies The Consumer Affairs Commission – This institution was set up to disseminate information about consumer rights and responsibilities as well as provide consumers with an avenue for redress [compensation for wrong done] if they are exploited.

Consumer rights (what they’re entitled to) -The right to safety -The right to be informed -The right to choose -The right to be heard -*The right to redress[compensation for a wrong done] -The right to consumer education -The right to a healthy environment Consumer responsibility -*The responsibility to beware[cautious and alert to danger] -*The responsibility to be aware [to have knowledge] -The responsibility to think independently -The responsibility to speak out -The responsibility to complain -The responsibility to be an ethical consumer -The responsibility to respect the environment and avoid waste, littering and contributing to pollution The Fair Trading Commission – This agency was set up to administer the fair trading act. It is concerned with matters such as; Tied selling (marrying of goods-if a good is scarce the firm will put it with another good to encourage others to buy the second good), misleading advertising (untruths about goods and services presented for sale), untrue sale (an announced sale for which the price of items remain the same) and the use of market dominance to squeeze firms out of the industry (For example, large firms may drop the price of their goods so low that small firms are unable to compete with them.)

The Bureau of standards -The bureau carries out regular checks on business enterprises to ensure that goods and services offered for sale meet the standards stipulated by this institution.

The Ombudsman-The Ombudsman is a government official who protects the rights of citizens who may suffer any kind of injustice from dealing with a government agency or a government official. For example, the Ombudsman will investigate the death of a loved one due to the negligence of a public hospital [they aren’t affiliated with a political party and can speak against the government] Consumerism practiced by private Institution -Local consumer groups -Radio talk show hosts listens to consumers’ complaints Consumerisms practiced by private firms -Offering warranty/guarantees on items sold -Labels carry information on ingredients, nutritional content and health risks that may be associated with the product.

Customer service *The idea of customer service is to try and please the customers Customers are important to every business, because they are their source of income the business depends on.

Customer service is sometimes called customer care. This is an important aspect of marketing because it gives the business the opportunity to develop customer loyalty and customer satisfaction (satisfied customers will come back and recommend it to others). Happy customers will return to the business when they receive help and advice about the products and alternatives without feeling pressured to purchase. A business can make customers happy by the following: Persons working in the business Warranty After-sakes service Online chat Toll free call centers Suggestion boxes Customer surveys Customer feedback Persons working in the business -persons who work in customer service should be patient and have good inter-personal skills -responsible for providing information about products you’re interested in

Warranty (even though it’s a promise, it is truly apart of a contract so it’s legally binding) -a written guarantee or promise from the manufacturer promising to repair or replace an item within a particular period of time -must be honored and pain free for the customer

After-sale service -the help given to customers after they have purchased products or services -installation, show you how to operate the good, put together the good, after calls to check in to see if the good is doing fine -you tend to go back and recommend to people

Online chats -allows customers to chat with someone in the business informally using the internet, especially when there are problems (on Amazon when you want to ask about your order and what’s happening it it)

Toll-free call centers -Allow customers to use their phones to call to find out information or rectify a matter without incurring cost (doesn’t charge you for the call) Suggestion boxes -allow customers to make suggestions about how the business can improve -employees can have suggestion boxes too

Customer surveys -aim to find out how satisfied customers are and to identify how the business needs to improve -can be done on the street or online -should be interesting, quick and easy -sometimes give rewards (free products) for completing them

Customer feedback -provides information from customers to improve the business

Property rights -an entrepreneur may have created an idea or product and want to protect it. -the law provides four main ways to protect intellectual property rights Trademark Copyright Patents Industrial design