Product and Service Marketing – SS3 Book Keeping Lesson Note (First Term)

Marketing is the activity, set of institutions and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society.

Behavioural objectives

By the end of the lesson, students should be able to:

1. Define marketing and state its functions.
2. Discuss the importance of marketing.
3. Outline the types of market.
4. Define the marketing concept and discuss its components.
5. State the four Ps of the marketing mix and explain each.
6. Explain what a product and a product mix are.

What is marketing?

Marketing is 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.

• Aim: to satisfy the target market and increase sales.
• Scope: it covers promotion, selling, pricing and distribution.
• Marketing mix: the combination of product, price, promotion and place used to satisfy the target market.

What are the functions of marketing?

There are seven main functions of marketing: promotion, selling, product management, marketing information management, pricing, financing and distribution.

• Promotion: informing and persuading customers to buy, for example through advertising.
• Selling: passing goods or services to buyers in exchange for money.
• Product management: planning, developing, branding and packaging products.
• Marketing information management: collecting and analysing facts about customers, competitors and the market.
• Pricing: fixing prices that cover costs and still attract buyers.
• Financing: providing money for marketing activities and, where needed, credit for buyers.
• Distribution: moving goods from the producer to the consumer, including transport and storage.

Why is marketing important?

Marketing is important because it helps a business reach customers, sell its offerings and grow its revenue.

• Increases brand awareness: more people get to know the business and its name.
• Generates high-quality leads: it attracts people who are likely to buy.
• Acquires new customers: it brings in buyers the business did not have before.
• Increases website traffic: more people visit the business’s online pages.
• Establishes industry authority: the business becomes a trusted name in its line of trade.
• Increases customer value: customers gain more benefit from what they buy.
• Boosts brand engagement: customers talk to, follow and respond to the brand.
• Increases revenue: more sales bring more income.
• Improves the internal brand: staff understand the brand and support it.

What is the marketing concept?

The marketing concept is the use of marketing data to focus on the needs and wants of customers.

• It is used to develop marketing strategies that satisfy customers.
• The same strategies help the organisation accomplish its own goals.

What are the components of the marketing concept?

• Customer orientation: the business starts from what customers need and want.
• Integrated marketing: all departments work together to serve the customer.
• Customer satisfaction: the business measures success by how satisfied its customers are.
• Organisational goals: satisfying customers must also bring profit and growth for the business.

What is a market?

A market is the total of all the buyers and sellers in the area or region under consideration.

• The area may be the earth, a country, a region, a state or a city.
• The value, cost and price of items traded are set by the forces of supply and demand.

What are the types of markets?

There are eight types of market: physical, virtual, auction, consumer, industrial, black, intermediate goods and financial markets.

• Physical market: a place where buyers and sellers meet in person and exchange goods for money. Examples are departmental stores, shopping malls and retail stores.
• Virtual (internet) market: sellers offer goods and services through online platforms, so buyers and sellers need not meet. Examples are Freelancer.com and Amazon.com.
• Auction market: buyers and sellers state the highest and lowest prices they will accept, and the exchange happens when both agree on a price. Examples are the New York Stock Exchange (NYSE) and the Nigerian Exchange (NGX), formerly the Nigerian Stock Exchange (NSE).
• Consumer market: the marketing of goods and services for personal and family use.
  • Fast-moving consumer goods: ready-to-cook meals, newspapers and magazines.
  • Consumer durable goods: fridges, televisions and personal computers.
  • Soft goods: shoes and clothes.
  • Services: hotels, hairdressing, schools and colleges.
• Industrial market: business-to-business sales of goods and services, not aimed at consumers.
  • Finished goods: office furniture.
  • Raw materials: gases and chemicals.
  • Services: security agencies, auditing and legal services.
• Black market: a market that deals in illegal goods, such as illegal drugs and weapons.
• Market for intermediate goods: a market that sells raw materials needing further processing into finished goods.
• Financial market: a broad market for dealing in liquid assets, for example shares and bonds.

What is the marketing mix?

The marketing mix is the specific combination of marketing elements used to achieve marketing objectives and satisfy the target market.

• It combines four inputs that form the core of a company’s marketing system.
• McCarthy, in Basic Marketing: A Managerial Approach, called these variables “the four Ps”.
• They are the four key programmes that can create demand and increase sales.

What are the four Ps of the marketing mix?

The four Ps of the marketing mix are product, price, place and promotion.

What is product?

A product is an item or service designed to satisfy customer needs and wants.

• Identify what makes it different from competing products or services.
• Decide whether other products or services can be marketed together with it.

What is price?

Price is the amount of money a buyer pays for the product, and it reflects what consumers are willing to pay.

• Cost-based pricing: the price considers the costs of research and development, manufacturing, marketing and distribution.
• Value-based pricing: the price depends mainly on the quality or value consumers perceive. It matters for status symbols.

What is place?

Place is where and how the product is made available to customers, also called distribution.

• The type of product decides the areas of distribution.
• Basic consumer products: such as paper goods, often available in many stores.
• Premium consumer products: typically available only in select stores.

What is promotion?

Promotion is the communication used to tell the target market about a product and persuade it to buy.

• Promotional mix: the combination of promotional activities used together in a campaign.
• Advertising: paid messages in media such as radio, television and newspapers.
• Sales promotion: short-term offers such as discounts.
• Personal selling: face-to-face selling by a salesperson.
• Public relations: building a good image of the business with the public.
• Budget: the money assigned to the marketing mix is a key consideration.
• Message and media: marketers build a message, often with details from the other three Ps, then choose the best media and how often to repeat it.

What are a product and a product mix?

A product is anything offered to satisfy a want, such as tangible goods like shoes or intangible services.

• A physical product is a set of tangible attributes assembled in an identifiable form, which the buyer sees as satisfying a want.
• A service has no physical form, for example hairdressing.

A product mix is the full range of products a business offers for sale.

• Marketers decide on features of each product to boost sales.
• Quality: how well the product does its job.
• Style: the look and design of the product.
• Brand name: the name that identifies the product.
• Packaging: the wrapping or container that protects and presents it.
• Durability: how long the product lasts.

Evaluation

1. Define marketing.
2. State five functions of marketing.
3. Outline four types of market with one example each.
4. Define the marketing concept and state its components.
5. Explain what a product and a product mix are.

Assignment

State the four Ps of the marketing mix and explain any two of them.