Introduction to Marketing – SS3 Commerce Lesson Note (Second Term)

Marketing is the process of assessing consumer needs, wants, preferences and demands, designing and producing goods and services that satisfy them, and moving those goods and services to the final consumer at a profit to the organisation. It is guided by the marketing concept and carried out through the marketing mix, also called the 4Ps.

Behavioural objectives

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

1. define marketing and state its importance to the economy;
2. list and explain the functions of marketing;
3. explain the marketing concept;
4. explain the four elements of the marketing mix;
5. define consumer sovereignty, market research, market segmentation and consumer orientation.

What is marketing?

Marketing is the whole set of activities that moves goods and services from producers to consumers in a way that satisfies the consumer and gives the firm a profit.

• Starts with the consumer: a firm first finds out what people need and want.
• Covers production: goods are designed and made to meet those needs.
• Covers distribution: goods are priced, promoted and delivered to the final consumer.
• Aims at profit: the firm must earn a profit while satisfying the consumer.

What is the difference between marketing and a market?

Marketing is a set of business activities. A market is a place or arrangement where buyers and sellers meet to exchange goods and services.

Why is marketing important to the economy?

Marketing is important because it links producers to consumers and supports economic growth.

1. Mass production: it encourages mass production, which lowers the unit cost of goods and services.
2. Competition: it promotes competition and efficiency among firms.
3. Standard of living: it makes modern goods available, so people live better.
4. Employment: it creates jobs for people who work in marketing.
5. Consumer satisfaction: it ensures that consumers get goods they want.
6. Economic growth: it increases productivity (GDP) and is the key to economic growth.

What are the functions of marketing?

The functions of marketing are the activities that carry goods from the producer to the consumer. There are twelve main functions.

1. Exchange function: bringing buyers and sellers together to trade goods and services.
2. Buying function: getting goods from producers or suppliers for resale.
3. Selling function: passing goods to customers, with the help of promotion.
4. Storage function: keeping goods in warehouses until consumers need them.
5. Transportation function: moving goods from where they are made to where they are needed.
6. Financing function: providing money, including credit, to produce, stock and sell goods.
7. Risk bearing function: accepting possible losses from theft, fire, spoilage or falling prices.
8. Pricing function: fixing a price that suits customers and gives the firm a profit.
9. Standardising and grading of goods: sorting goods by size and quality so buyers know what they get.
10. Market information and research: collecting facts about consumers, demand and competitors.
11. Production planning and development: deciding what to produce and improving existing products.
12. Determining the level of production: deciding how much to produce so that supply matches demand.

What is the marketing concept?

The marketing concept is the principle that a business exists to satisfy the needs and wants of its customers.

• Customer focus: all marketing activities aim at identifying consumer needs and producing goods to satisfy them.
• Firm’s goal: while meeting consumer needs, the firm also meets its own goal of maximising profit.
• When it is adopted: a company adopts the concept when all its efforts go towards meeting the needs and aspirations of consumers.

What does the marketing concept include?

1. Identifying the needs of consumers.
2. Developing products to suit these needs.
3. Planning and organising programmes to bring the product to the consumers.
4. Carrying out post-sales activities that ensure the products are satisfactory in use.

What is the marketing mix?

The marketing mix is the combination of four controllable variables used by a business to set its marketing policy, in order to satisfy consumers and increase sales.

There are four elements of the marketing mix, called the 4Ps: product, price, promotion and place.

What is the product mix?

The product mix is concerned with developing the right product for the target market.

• Packaging: the container or wrapper that protects and presents the product.
• Labelling: information on the pack, such as contents and use.
• Branding: the name or sign that identifies the product.
• Trademark: a registered symbol or name that only the owner may use.
• Design, modification, durability and quality: decisions on how the product looks, changes and lasts.

What is the price mix?

The price mix is placing the right, profitable and justifiable price on a product that suits customers and brings the manufacturer higher revenue.

• Discounts: reductions in price, for example for buying in bulk.
• Credit terms: conditions for paying later.
• Allowances: deductions given to buyers, for example for old goods or damaged items.
• Margins and markup: the amount added to cost to give the selling price.
• Freight: the cost of carrying goods, which may be added to the price.

What is the promotion mix?

The promotion mix is the set of methods a business uses to let the public know about its products and services.

• Personal selling: face-to-face contact between a sales person and the customer.
• Sales promotion: short-term offers such as free samples, discounts and coupons.
• Advertising: paid messages through radio, television, newspapers or billboards.
• Publicity: news about the firm or product in the media, not paid for by the firm.
• Public relations: activities that build a good image of the firm with the public.

What is the place mix?

The place mix covers all the activities that move goods and services to consumers.

• Right place: goods are made available in the right market.
• Right time: goods arrive when consumers want them.
• Right quantity and quality: consumers get the amount and standard they expect.
• Distribution: the producer decides how goods reach consumers, through wholesalers, retailers and transport.

What do the main marketing terms mean?

Four terms are important in marketing: consumer sovereignty, market research, market segmentation and consumer orientation.

1. Consumer sovereignty: the idea that consumers are always right and decide what a firm produces. Planning and operations must keep the consumer in mind.
2. Market research: the study a firm carries out to find consumer demand and to guide its production and marketing.
3. Market segmentation: grouping consumers by their purchasing habits. It helps a firm define its target markets.
4. Consumer orientation: the approach to marketing that begins and ends with the needs and wants of consumers, not those of the organisation. Consumer satisfaction is its main aim.

Evaluation

1. Define marketing and the marketing concept.
2. Explain five functions of marketing.
3. Explain the four elements of the marketing mix.
4. Differentiate between marketing and a market.
5. Explain the meaning of the term “market segmentation”.

Assignment

Answer the following questions and read Essential Commerce for SSS by O.A. Longe, pages 292 to 306.

1. The general idea of “looking at a business but using the consumer as the mirror” illustrates (a) marketing concept (b) market orientation (c) consumer research (d) product orientation
2. To know precisely how consumers react to a product, a manufacturer should (a) conduct a feasibility study (b) take stock control (c) undertake marketing research (d) product
3. Which of the following is not part of the four Ps of marketing? (a) place (b) publicity (c) promotion (d) product
4. Marketing concept means (a) selling goods directly to consumers (b) introducing a new product into the market (c) emphasising consumer satisfaction (d) persuading customers to buy more
5. The combination of methods used by a firm for marketing its products is known as (a) market research (b) marketing mix (c) marketing concept (d) market segmentation
6. Define the term “marketing mix”.
7. List four components of the marketing mix.