Marketing: concept, functions and the marketing mix: WASSCE Commerce

A good product does not sell itself. Someone must find out what customers want, set a price they will pay, get the product to where they shop and tell them it exists. That whole process is marketing. It begins before production and continues after the sale.

Learning objectives

By the end of this lesson you should be able to:

define marketing and explain the marketing concept
explain the functions of marketing
describe the marketing mix (the four Ps)
explain market research and market segmentation
explain the product life cycle and pricing methods

Meaning of marketing

Definition

Marketing is the process of finding out what customers want and satisfying those wants at a profit. It covers market research, product design, pricing, distribution, promotion and after-sales service.

Marketing is wider than selling. Selling is persuading people to buy what has already been produced; marketing starts by asking what people want and then produces it.

Approach	Focus
Production concept	Make goods cheaply and in large quantities; customers will buy
Selling concept	Push what has been made through strong selling and advertising
Marketing concept	Find out customer needs first, then produce to satisfy them
Societal marketing concept	Satisfy customers in a way that also protects society and the environment

Functions of marketing

Market research: finding out what customers want, at what price, and what competitors do.
Product planning and development: designing products to meet wants.
Buying and assembling: collecting goods or produce from many producers.
Selling: transferring ownership to buyers.
Standardisation and grading: sorting goods by quality and size so buyers know what they get.
Packaging and branding: protecting and identifying the product.
Pricing: setting prices that customers will pay and that cover costs.
Transport and storage: getting goods to where and when they are wanted.
Promotion: advertising, sales promotion and public relations.
Financing: giving credit to buyers and paying producers.
Risk-bearing: price changes, damage and unsold stock.
After-sales service: repairs, guarantees and handling complaints.

Market research

Market research is the systematic collection and analysis of information about customers, markets and competitors.

Method	Example
Questionnaires and surveys	Asking 200 students in Bo which snack they prefer
Interviews	Talking to shop owners about sales of a new drink
Observation	Watching which products customers pick up first
Test marketing	Selling a new product in one town before the whole country
Desk research	Using existing data: government statistics, trade reports, sales records

Market segmentation divides the market into groups with similar needs: by age (children, youths), income, location (urban, rural), gender, occupation or lifestyle. A firm can then target each segment with a suitable product and message.

The marketing mix

The four Ps of the marketing mix around the target customer: product, price, place and promotion

Figure 1. The marketing mix: the four Ps around the target customer. WASSCE Tutor diagram.

P	Decisions
Product	Quality, design, features, brand name, packaging, sizes, guarantee
Price	Price level, discounts, credit terms, pricing method
Place	Channels of distribution, outlets, location, transport, stock levels
Promotion	Advertising, sales promotion, personal selling, public relations

The four Ps must fit together. A cheap product sold through a luxury shop with expensive TV adverts will confuse customers.

Pricing methods

Method	How it works	Example
Cost-plus	Add a fixed mark-up to cost	Cost NLe 40 + 25% = NLe 50
Competitive pricing	Price at or near competitors' prices	Soft drinks of similar size
Penetration pricing	Low price to win market share, raised later	A new mobile network's cheap data bundles
Price skimming	High price at launch, lowered later	A new phone model
Psychological pricing	Prices just below a round figure	NLe 9.99 instead of NLe 10
Price discrimination	Different prices for different groups	Student and adult fares

The product life cycle

Sales of a product over time: slow rise at introduction, fast rise in growth, levelling off at maturity and falling in decline

Figure 2. The stages of the product life cycle. WASSCE Tutor diagram.

Stage	Sales and profit	Marketing action
Introduction	Sales low; losses likely (high launch costs)	Heavy advertising to create awareness; free samples
Growth	Sales rise fast; profit appears	Expand distribution; build brand loyalty
Maturity	Sales level off; competition strongest	Competitive pricing; new packaging or features
Decline	Sales and profit fall	Cut costs, cut price, or withdraw the product

Firms try to extend a product's life with extension strategies: new flavours, new sizes, new packaging, new uses or new markets.

In Sierra Leone

Think of mobile phone services in Sierra Leone. A new network launches with penetration pricing (cheap calls and data) and heavy advertising (introduction). As subscribers grow it extends coverage (growth). When most people have a phone, networks compete with bundles and promotions (maturity). Older services, such as fixed lines and fax, have entered decline.

Common mistake

Marketing is not the same as selling or advertising. Selling and advertising are only parts of marketing, which also includes research, product design, pricing and distribution.

Key points

Marketing finds out customer wants and satisfies them at a profit; it is wider than selling.
Functions include research, product planning, buying, selling, grading, packaging, pricing, transport, storage, promotion, financing and risk-bearing.
Marketing mix: product, price, place and promotion.
Product life cycle: introduction, growth, maturity, decline; extension strategies prolong it.

WASSCE examination focus

WAEC tests this

Expect to define marketing, to state the functions of marketing, to explain the four Ps of the marketing mix, and to explain the stages of the product life cycle (sometimes with a sketch). Distinguish marketing from selling when asked.

Quick check

Distinguish marketing from selling.
Name the four Ps of the marketing mix.
At which stage of the product life cycle is competition strongest?
What is penetration pricing?

Answers: 1. Marketing finds out what customers want and produces to satisfy them; selling persuades customers to buy what has already been produced. 2. Product, price, place and promotion. 3. Maturity. 4. Setting a low price for a new product to win market share quickly, then raising it later.

Marketing: concept, functions and the marketing mix