TBH 064: PRINCIPLES AND PRACTICE OF MARKETING.

Topic 1: Nature and scope of sales and marketing

Meaning of Marketing
Marketing refers to the act of finding out what customers need, planning
ahead, and meeting those needs in a way that benefits both the business
and customers. It’s more than just selling, it’s about creating value and
building good relationships.
Marketing process
This is the process by which a business understands customer needs, creates
suitable products or services, promotes them, delivers them to the right
people, and then collects feedback to improve and achieve business goals.
The process involves the following steps:
1. Market Research: This is where businesses collect information about
customers’ needs, tastes, and current market trends.
2. Market Segmentation & Targeting: Customers are divided into
groups based on age, income, lifestyle, etc. The business then chooses
the group(s) it wants to serve. Example: A clothing brand may target
teenagers or working-class professionals.
3. Product/Service Development: Businesses create or improve
products/services to match the needs of their chosen market.
4. Promotion & Communication: The business informs customers
about its products and persuades them to buy. Methods include
advertising, social media, personal selling, and discounts.
5. Distribution (Place): Ensures that products reach customers in the
easiest and most convenient way. Can be through shops,
supermarkets, online stores, or direct delivery.
6. Feedback & Control: After selling, the business checks if customers
are satisfied and whether goals are being met. Feedback helps
improve products, services, and strategies.
Goals of marketing
These are the main purposes businesses aim to achieve through their
marketing activities. They include:
1. Satisfying customer needs – ensuring products and services meet
what customers want.
 2. Creating customer value – offering benefits that make customers
prefer a product or brand.
3. Building strong customer relationships – encouraging loyalty and
repeat purchases.
4. Achieving profitable sales – increasing revenue while keeping costs
in check.
5. Growing market share – attracting more customers than
competitors.
6. Enhancing brand image – making the business well-known and
trusted.
7. Supporting overall business success – contributing to long-term
growth and competitiveness.
Marketing philosophies
Marketing philosophies are the different approaches or mindsets
businesses use to guide how they produce, sell, and deliver
products/services to customers. They show how a company thinks about
satisfying customer needs and achieving its goals.
The main marketing philosophies are:
1. Production Concept – Focus on making products in large quantities
at low cost, assuming customers want affordable and available goods.
2. Product Concept – Focus on high quality, features, and innovation,
believing customers will prefer the best product.
3. Selling Concept – Emphasis on aggressive selling and promotion to
convince customers to buy.
4. Marketing Concept – Customer-centered; success comes from
understanding and meeting customer needs better than competitors.
5. Societal Marketing Concept – Considers not only customer
satisfaction and company profit but also the well-being of society (e.g.,
eco-friendly products).
Historical development of marketing
Historical development of marketing refers to the stages through which
marketing has evolved over time, showing how businesses’ focus shifted
from just producing goods to creating value for customers and society.
The main stages are:
 1. Barter Trade System Era – Exchange of goods and services without
money.
2. Production Era (late 1800s – early 1900s) – Focus on mass production
and making products affordable. During this era, the main business
focus was on producing goods in large quantities at low cost. The belief
was that customers mainly wanted products that were cheap and
easily available.
3. Sales Era (1920s – 1950s) – Emphasis on aggressive selling and
advertising to push products. The Sales Era was about selling what the
company made, using advertising and personal selling to push
products, rather than focusing on what customers really wanted.
4. Marketing Era (1950s onwards) – The Marketing Era began in the
1950s, when businesses realized that producing goods and pushing
them to customers (like in the production and sales eras) was not
enough. Instead, they had to focus on what customers actually wanted.
Use of the 4Ps (Product, Price, Place, Promotion).
5. Societal Marketing Era (1970s – present) – Focus on customer
satisfaction, company profit, and social responsibility. This era built on
the Marketing Era but went a step further. Businesses realized that it’s
not enough to only satisfy customers and make profits – they must also
consider the long-term well-being of society, doing what is right for
society and the environment.
6. Relationship/Modern Marketing Era (2000s – present) – Emphasis on
building long-term customer relationships, digital marketing, and
personalization. This is the current stage of marketing, where
businesses focus not just on selling products but on building strong,
long-term relationships with customers. Technology and the internet
play a big role.
Role of marketing in economic development.
i. Stimulates Production – By creating demand, marketing motivates
producers to make more goods and services.
ii. Creates Employment – Jobs are created in production, transport,
advertising, and sales.
iii. Facilitates Distribution – Ensures goods and services reach
customers efficiently.
iv. Encourages Innovation & Competition – Businesses improve
products and services to attract customers.
v. Improves Standard of Living – People access a variety of affordable
goods and services that meet their needs.
vi. Enhances Foreign Trade – Marketing opens up international
markets, increasing trade and integration.

Topic 2: Marketing Environment.

Marketing environment refers to all the external and internal factors that
affect a business’s ability to create, maintain, and grow good relationships
with customers.
Two Main Parts of the Marketing Environment
1. Internal Environment (within the business): Factors the company can
control.
 Examples: employees, company policies, technology, financial
resources, company culture.
2. External Environment (outside the business: Factors beyond the
company’s control, divided into:
 Micro-environment – Immediate forces close to the business
(customers, suppliers, competitors, distributors, government
agencies).
 Macro-environment – Larger forces shaping society and the
market (economic, social, cultural, political, legal,
technological, and environmental factors).
Micro-Environment Factors
These are immediate forces around a company that directly affect its ability
to serve customers. They are partly controllable.
1. Customers – The target market; businesses must understand their
needs and preferences.
2. Suppliers – Provide raw materials, services, and resources. Strong
supplier relations affect cost and quality.
3. Competitors – Other firms offering similar products/services.
Competition drives pricing, innovation, and marketing strategies.
4. Intermediaries – Wholesalers, retailers, agents, distributors who help
move products to customers.
 5. Employees – Their skills, motivation, and productivity directly impact
performance.
6. Government & Local Community – Regulations, licenses, and
community expectations can affect operations.
Macro-Environment Factors
These are large external forces that shape the business environment. They
are beyond a company’s control but must be adapted to.
1. Economic Factors – Inflation, interest rates, unemployment, income
levels affect purchasing power.
2. Political & Legal Factors – Laws, government policies, taxation, and
trade regulations influence business operations.
3. Social & Cultural Factors – Values, beliefs, lifestyle, demographics,
education levels determine customer behavior.
4. Technological Factors – New innovations, digital platforms, and
automation affect production and marketing.
5. Environmental Factors – Climate change, sustainability, and
ecological concerns shape modern business practices.
6. Global/International Factors – Globalization, foreign trade,
international competition, and exchange rates.
Effects of Environmental Factors on Marketing
Marketing decisions are strongly influenced by both micro and macro
environmental factors. Environmental factors shape what products to offer,
how to price them, how to promote them, and how to deliver them.
Businesses that ignore these factors risk losing customers, while those that
adapt gain a competitive advantage.
Their effects include:
1. Effect on Product Decisions
 Customer preferences (micro) determine what products should be
produced.
 Technological changes (macro) push businesses to innovate or update
products.
 Environmental concerns (macro) lead to eco-friendly product designs.
2. Effect on Pricing
  Competition (micro) influences whether prices should be high, low, or
competitive.
 Economic conditions (macro), such as inflation or recession, affect
customer purchasing power and pricing strategies.
 Government regulations (macro), like price controls or taxation, can
restrict pricing freedom.
3. Effect on Promotion
 Social and cultural factors (macro) guide the type of promotional
messages acceptable in different markets.
 Technological factors (macro), such as digital media, change how
products are advertised.
 Competitors (micro) force firms to use more aggressive or creative
promotional campaigns.
4. Effect on Place (Distribution)
 Intermediaries (micro) determine how efficiently goods reach
customers.
 Globalization (macro) opens up international distribution opportunities.
 Infrastructure and government policies (macro) affect how easily goods
can be distributed.
5. Effect on Customer Relationships
 Social factors (macro), like changes in lifestyle, shift customer
expectations.
 Economic changes (macro) affect loyalty (e.g., customers may shift to
cheaper brands during recessions).
 Competition (micro) makes companies invest more in customer service
and retention strategies.
End 17/9/2025
24/9/2025
TOPIC 3: MARKET SEGMENTATION AND TARGETING
Market Segmentation: The process of dividing a large market into smaller groups of consumers
with similar needs, characteristics, or behaviors.
Targeting: Selecting the most attractive segment(s) from the identified groups and focusing
marketing efforts on them.
Example: A clothing company may segment the market into children, youth, and adults, then
target youth with trendy fashion.
Importance of Market Segmentation and Targeting
1. Helps businesses identify customer needs more accurately: By dividing the market into
smaller groups, businesses can study each group’s unique needs, preferences, and
behaviors. Example: A skincare company can identify that teenagers want acne
treatment while older adults want anti-aging products.
2. Enables efficient use of resources by focusing on specific groups: Instead of spending
money trying to reach everyone, firms concentrate their budget, time, and effort on the
most promising segments. This reduces waste and increases return on investment.
3. Improves customer satisfaction through tailored products and promotions: Products and
marketing messages are designed to suit the chosen segment. Example: Sports brands
create athletic gear specifically for runners, footballers, or swimmers.
4. Enhances competitive advantage by serving a specific market better: When a company
specializes in meeting the needs of a segment, it stands out from competitors. Example:
A restaurant that focuses only on vegetarian food may attract loyal vegetarian customers.
5. Supports effective positioning in the market: Positioning is how customers see a brand
compared to competitors. Segmentation and targeting allow businesses to design a unique
 image or message that appeals directly to their chosen group. Example: Apple positions
itself as a premium brand for tech-savvy and design-conscious consumers.
Basis of Market Segmentation
This refers to the different criteria that marketers use to divide a large market into smaller and
more manageable groups of consumers who have similar needs, characteristics, or behaviors.
1. Demographic Segmentation
 Divides the market based on personal characteristics.
 Factors: Age, gender, income, education, occupation, family size, religion.
 Example:
o Baby products for infants (age) e.g. Nila baby shop
o Luxury cars for high-income earners (income) e.g. Prado
o Cosmetics designed separately for men and women (gender) e.g. Nivea for Men
2. Geographic Segmentation
 Divides the market based on location and physical environment.
 Factors: Region, country, city, climate, urban vs. rural.
 Example:
o Warm clothing for cold regions.
o Solar products for rural areas with limited electricity.
o Fast-food chains offering different menus in different countries.
3. Psychographic Segmentation
 Divides the market based on lifestyle, personality, and social class.
 Looks at people’s attitudes, interests, and opinions.
 Example:
o Gym memberships for health-conscious people (lifestyle).
o Adventure travel packages for outgoing personalities.
o Premium brands like Gucci targeting upper-class consumers (social class).
4. Behavioral Segmentation
 Divides the market based on consumer behavior and usage patterns.
  Factors: Buying habits, brand loyalty, benefits sought, usage rate (heavy, medium, light
users).
 Example:
o Airline companies rewarding frequent flyers (loyalty).
o Whitening toothpaste for customers who want cosmetic benefits (benefits sought).
o Special discounts for heavy data users in telecom companies.
Process of Market Segmentation and Targeting
1. Identify the Market: Define the broad market you want to serve. Example: A company
wants to enter the smartphone market.
2. Develop Segmentation Bases: Decide how to divide the market (demographic,
geographic, psychographic, behavioral). Example: Segment by age (youth vs. adults) or
income (low-income vs. high-income).
3. Profile Market Segments: Describe each segment’s characteristics in detail. Example:
o Youth (18–25): love trendy, affordable smartphones.
o Professionals (25–40): prefer high-performance, stylish phones.
4. Evaluate Segments: Assess each segment’s size, purchasing power, growth, and
accessibility. Example: Professionals may have higher income and offer better
profitability than students.
5. Select Target Market(s): Choose the most attractive and profitable segment(s) to focus
on. Example: Target professionals aged 25–40 with higher disposable income.
6. Develop Positioning Strategy: Decide how to create a unique image in the minds of
customers. Example: Position the phone as a premium yet affordable business
smartphone.
7. Design Marketing Mix: Create tailored strategies for the 4Ps (Product, Price, Promotion,
Place). Example:
o Product – Sleek smartphone with business features.
o Price – Mid to high range.
o Promotion – Ads highlighting productivity and style.
o Place – Sell in urban tech stores and online platforms.
Benefits of Market Segmentation and Targeting
i. Better customer satisfaction through tailored products.
ii. Increased market share and profits.
iii. Stronger brand loyalty.
 iv. More effective marketing campaigns.
v. Reduces wastage of resources.
Limitations of Market Segmentation and Targeting
 Can be costly (research, customized products, specialized promotion).
 Risk of ignoring other potential customers outside the chosen segment.
 Dynamic markets – customer preferences may change quickly.
 Requires detailed data, which may not always be available.
 Over-segmentation may lead to inefficiency: over-segmentation means cutting the market
into so many tiny pieces that serving them becomes wasteful and ineffective.

CONSUMER MARKET AND ORGANIZATIONAL MARKET

 Consumer Market: Refers to individuals and households who purchase goods and
services for their own personal use, not for resale or production.
Example: A family buying groceries, clothes, or a TV.
 Organizational Market: Refers to businesses, government agencies, and institutions that
buy goods and services either to produce other products/services, to resell, or to support
their operations. Example: A hospital buying medical equipment, or a company buying
raw materials to manufacture products.

2. Importance of Studying Consumer Behavior

i. Helps businesses understand what customers want and need.
ii. Guides product design, packaging, and pricing decisions.
iii. Assists in creating effective marketing and promotional strategies.
iv. Helps predict market trends and consumer responses.
v. Enhances customer satisfaction and loyalty by meeting expectations.

3. Factors Influencing Consumer and Organizational Buying Behavior

Consumer Buying Behavior Factors:
These are the reasons why individuals decide to buy or not buy a product.
 i. Cultural Factors: Culture shapes values, preferences, and habits. Example: In some
cultures, rice is a staple food, so consumers will naturally prioritize it over alternatives.
ii. Social Factors: Influence from family, friends, peers, and social groups. Example: A
teenager buying trendy shoes because friends wear them.
iii. Personal Factors: Age, occupation, income, lifestyle, personality. Example: Young
adults may prefer fast food, while older adults may prefer healthier meals.
iv. Psychological Factors: Motivation, perception, learning, beliefs, and attitudes. Example:
A consumer motivated by prestige may buy a luxury car, not just for transport but for
status.
Organizational Buying Behavior Factors:
These affect how companies, institutions, or governments make purchasing decisions.
i. Organizational Factors: Company objectives, policies, size, and structure. Example: A
large hospital may require bulk medical supplies, while a small clinic only buys limited
quantities.
ii. Economic Factors: Budget limits, cost savings, and overall economic conditions.
Example: During economic downturns, organizations cut costs and seek cheaper
suppliers.
iii. Supplier-Related Factors: Reliability, reputation, quality, and delivery performance of
suppliers. Example: A university choosing a reliable IT supplier who can provide
ongoing support.
iv. Decision-Making Process: Involves multiple people, committees, and formal
procedures. Example: A tendering process where various departments must approve
before purchase.
v. Environmental Factors: Competition, government regulations, technology, and global
market trends. Example: A company adopting eco-friendly packaging due to government
environmental regulations.
Buying Decision-Making Process
Consumer Market Process:

This is the process an individual follows before, during, and after buying a product or service.

1. Problem Recognition: The consumer realizes they have a need or problem. Example: A
student realizes their phone is too slow and needs a new one.
2. Information Search: The consumer looks for information about possible solutions.
Example: Searching online for best smartphones within budget, asking friends, or visiting
shops.
 3. Evaluation of Alternatives: Comparing available options based on price, quality, brand,
and features. Example: Comparing Samsung vs. iPhone vs. Tecno.
4. Purchase Decision: The consumer chooses the product they believe best satisfies their
need. Example: Finally deciding to buy a Samsung phone.
5. Post-Purchase Behavior: After purchase, the consumer evaluates whether they are
satisfied or dissatisfied. Example: If satisfied, they may recommend it to others; if
dissatisfied, they may complain or switch brands next time.

Organizational Market Process:

1. Problem Recognition: The organization identifies a need for goods or services.

Example: A university realizes its library computers are outdated.
2. General Need Description: The organization defines what is required. Example: The
university specifies that it needs 100 computers for students.
3. Product Specification: Technical details and exact requirements are written down.
Example: Computers must have 8GB RAM, 500GB SSD, Windows OS, etc.
4. Supplier Search: The organization looks for potential suppliers. Example: Inviting
tenders or checking vendor lists.
5. Proposal Evaluation and Selection: Comparing supplier offers based on price, quality
and reliability. Example: Choosing between HP supplier and Dell supplier.
6. Order Placement: Placing the final order with terms of delivery, payment, and
warranties. Example: Contract awarded to HP supplier for delivery in 3 months.
7. Performance Review: Evaluating supplier performance after delivery. Example:
Checking if the computers met the specifications and arrived on time.

5. Role Players in the Decision-Making Process

 Consumer Market:
o Initiator – identifies the need (e.g., child asking for a toy).
o Influencer – gives advice or opinions (e.g., friend recommending a brand).
o Decider – makes the final choice (e.g., parent choosing which toy to buy).
o Buyer – physically purchases the product.
o User – actually uses the product.
 Organizational Market:
o Users – people who will use the product in the organization.
o Influencers – technical experts who specify requirements.
o Buyers – responsible for procurement and supplier negotiations.
o Deciders – individuals or committees with final authority.
o Gatekeepers – control the flow of information (e.g., secretaries, IT systems).
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