ENTREPRENUERSHIP SENIOR THREE

MARKETING MANAGEMENT

Marketing refers to a series of activities an entrepreneur does to find out who his/her customers are and what they need or want. ACTIVITIES/STEPS FOLLOWED WHEN CARRYING OUT MARKETING 1. Finding out who the customers are e.g students, adults or children. 2. Finding out customers’ needs or wants. E.g quality needs 3. Developing and providing a product or service that meet customers’ needs. 4. Setting prices that are affordable. 5. Making products available at places where customers can find them e.g in shops, supermarkets, market centers etc. 6. Promoting the products by informing and attracting customers to buy them. This is done through advertising. NB.These steps must be given in order MARKETING TECHNIQUES i. Ensuring proper communication to customers. ii. Ensuring proper negotiations with customers and suppliers. E.g price negotiation iii. Advertising business products. iv. Ensuring proper product display v. Offering price reduction/ discount vi. Ensuring good decision making e.g price decisions. vii. Ensuring quality production. viii. Carrying personal selling. This involves selling goods to customers through door to door Guiding questions: a). What is meant by the term marketing. b). Describe the marketing activities / steps/ procedures/ process c). Outline the marketing techniques used by business entrepreneurs. PERSONAL SELLING / SALES MANSHIP / CREATIVE SELLING

[caption id="attachment_130608" align="alignnone" width="300"] ideas for personal selling[/caption] Personal selling refers to a process where a group of salesmen are emplo yed to sell goods directly to customers on behalf of the manufacturer. The following are the steps followed when carrying out personal selling / salesmanship/creative selling.

- Prospecting. This involves locating where customers are before taking goods to them.In prospecting therefore,an entrepreneur finds out where to go,who to see and what to do and say. - Pre-approach. This involves getting details about the customers such as their income levels, consumption, habits etc and information about business's products and competitors. - Approach. This involves approaching the customer through face to face. - Sales presentation. This is to attract and retain the buyer's attention. It involves taking the product to the customer and it also involves carrying out demonstrations and show how the product works. - Handling objections. This involves clearing out customer’s objections. - Closing the sale. This involves guiding the customer about which to buy in terms of colour, size, shape etc - Sales follow up. This involves following up the customer after selling the product e.g whether the product performed its intended purpose. WAYS TO ENSURE SUCCESSFUL PERSONAL SELLING. - Making strong point about the product right from the start. - Mentioning more of product benefits than features. - Giving a customer complete attention. - Involving the buyer in the discussion. - Listening to customers to make him feel important. - Charging affordable prices. - Talking to customers politely. OUTLINE THE QUALITIES OF A GOOD SALES PERSON. i. Attractive personality ii. He should be enough knowledgeable about the product. iii. He should be honest and truthful. iv. He should be persuasive. v. He should be polite to the customers. vi. He should possess good communication skills. vii. He should be smartly and decently dressed. This makes him to be more presentable. REASONS FOR CARRYING OUT PERSONAL SELLING i. To increase sales. This is due to increased number of customers. ii. To outcompete other business competitors. This is due to direct accessibility to customers. iii. To expand the market share. This increases sales. iv. To attract new business customers. This increases sales. v.  To identify and collect the customers opinions and suggestions towards a given product. vi. To improve the relationship between the business and its customers. This is due to direct contact that can be created. vii. To create confidence and mutual trust between the sales person and the customers. viii. To save customers from being exploited by the middlemen in form of high prices. ix. To enable product demonstration and performance i.e. showing how a product works. x. To enable provision of technical and complex information about a certain product. e.g. products that are electrical in nature. xi. To create two-way communication between the customer and the sales person. This creates customer feedback. Guiding questions: (a) What is meant by the term personal selling/salesmanship/ creative selling. (b) Explain the steps followed when carrying out personal selling. (c) Give reasons for carrying out personal selling. TECHNIQUES OF TREATING CUSTOMERS WELL · Treating customers well and where possible call them by their names. · Being polite and friendly to customers. · Looking tidy and clean and appealing to customers. · Listen carefully to what customers say and ask questions to find out what they need. · Being patient to customers. · Being honest and trustworthy · Avoid making arguments with customers. · Thanking the customers for visiting the business. · Having product knowledge. UNDER WHAT CIRCUMSTANCES IS PERSONAL SELLING NEEDED? § When the product is still new on the market. § When the competition is high § When there is need to extend after sales services to the customers § When goods are very expensive. § When demonstration is needed. § When goods need minimum handling. § When the market consists of few customers who can easily be accepted. MARKET SURVEY This is the collection of information from existing and potential customers that can be used in the entrepreneur’s business decision.

GIVE REASONS FOR CARRYING OUT MARKET SURVEY / RESEARCH. i. To identify the business customers. i.e. children or adults, female or male e.t.c. ii. To identify the position of business competitors. iii. To identify the market size and the market gaps available. iv. To identify the customer’s complaints and suggestions e.g. complaints about high prices. v. To identify the appropriate distribution channel to be used. vi. To identify the income segments of the customers i.e. low, medium or high vii. To guide the entrepreneur in making decision whether to expand or improve on the current business. viii.To determine the effectiveness of advertising and promotional strategies for attracting customers. ix. To find out what the customers need in terms of colour, size and appearance of the products. METHODS USED WHEN CARRYING OUT MARKET SURVEY / MARKET RESEARCH. The following are the methods used when carrying out market survey. i. By observation. This involves looking around the environment and identify what could be the needs of customers. ii. Questionnaire. This involves designing questions and issue them to customers containing information which you may wish to get from customers. iii. Quiz. This involves asking simple questions which require simple answers. iv. Internet surfing. This involves visiting social media like face book, watsup to get information. v. Interviewing. This involves having an oral discussion with people through face to face. vi. Checking business past records and files. vii. Sampling. This involves choosing a small group to represent a big group. viii. Brainstorming. This involves gathering different opinions from different respondents to be narrowed to the best. ix. Using written information. This involves collecting information from written sources like archives, newspapers, magazines e.t.c. NB. Market survey information is similar to that of market research and market assessment. PREPARATION OF A MARKET SURVEY GUIDE Name and address of the business 1. Name of the customer 2. Sex 3. Age 4. Income segment poor middle rich 5.What products are preferred most and why? 6.What unique features should the products have? 7.What are the prices charged in the market? 8. What promotional strategies will be effective? NATURE OF INFORMATION COLLECTED DURING MARKET SURVEY i. Customer identity. This include age, occupation, family size, marital status, income levels, consumption habits e.t.c. ii. Customer needs. These may be in terms of product variety, quality, price needs, guarantee needs e.t.c. iii. Competition levels. This covers substitutes available, business competitors and their location e.t.c. iv. Trends. These include; population shifts. - Legal or regulatory developments that may affect market. - Current fashions and designs or market. - Other innovations on market e.t.c . SOURCES OF MARKET INFORMATION Market information can be got from the following sources: i. Trade associations like Uganda Manufactures Association, Uganda Women Entrepreneurs Association, e.t.c. ii. Uganda National Chamber of Commerce and industry. iii. District Commercial offices. iv. Government agencies like Export Promotion Board, Uganda Investment Authority, Ministry of Trade, Tourism and Industry, Uganda Bureau of Statistics. v. Publications such as magazines, newspapers, books, e.t.c. vi. The community including friends, likely customers, suppliers, competitors, e.t.c. vii. Regional private sector development centers. MARKETING MIX This is a combination of all marketing activities which can be done in order to satisfy the target market. ELEMENTS OF MARKETING MIX. i. Product. This is a good/service offered by a business to satisfy customers’ needs. ii. Place. This is concerned with how and where the seller can make product available to customers. This is done through product distribution. iii. Price. This is the monetary value of the product. iv. Promotion. This refers to any activity used informing and attracting customers to buy a product for the first time and to buy more of it. v. Positioning. This involves putting the product in strategic points where customers can access them e.g. opposite the school gate. FACTORS CONSIDERED WHEN DEVELOPING A PRODUCT 1. The customer’s needs. E.g price needs, quality needs etc 2. The product of the competitors. 3. Availability of raw materials. This ensures continuous production 4. The government policy and regulatory standard in relation to the product to be produced. 5. Environmental considerations. Such as its effect on the environment. 6. Life span of the product. i.e. product durability. 7. The product features like colour, shape, size, brand name. c). What factors are considered when determining prices? 1. The cost of the product. High costs lead to high prices charged and low costs lower the prices. 2. The quantity in which people buy and how much they are willing to pay. Large quantities make the prices to be lowered. 3. The prices of competitors. It is advisable to charge low prices compared to those of the competitor. 4. The need to make prices more attractive to customers. This makes prices to be lowered 5. The profit margin that the entrepreneur would like. 6. The seasonality of the products. Prices are lowered during particular seasons like festive seasons. 7. The durability of the product. Durable products are highly priced. 8. The income segment of customers. High prices are charged to customers whose income is high. 9. The pricing policy of the government. Sometimes the government determines the price to be charged for particular products. 10. The quality of the products. Products of high quality are charge with high prices compared to those of poor quality. METHODS USED BY BUSINESS ENTREPRENEURS WHEN DETERMINING PRICES. i. Cost oriented pricing. This involves setting prices basing on the cost of production. The higher the costs of production, the higher the prices and vice versa ii. Demand oriented pricing. This involves setting prices depending on the demand of a given product. The higher the demand, the higher the prices and vice versa iii. Competition oriented pricing. This involves setting prices depending on the demand of a given product. The higher the competition, the lower the prices and the lower the competition, the higher the prices iv. Marginal pricing. This is commonly used method where the price charged covers the direct costs of the products. v. Fashioned oriented pricing. This involves charging prices depending on the current fashion of the products. vi. Government pricing policy. This is where the prices set depending on the government’s regulation. vii. Resale price maintenance method. Price is set by the manufacturer which retailers should follow. viii. Bargaining method. This is where prices are set depending on the bargaining power of the customer. ix. Value oriented pricing. Here prices are charged depending on the value of the product. Guiding questions: a) Explain the factors considered when determining prices. b) Explain the methods used by the business entrepreneur when determining prices. WAYS OF PROMOTING THE BUSINESS PRODUCT. - Using intensive advertising through making adverts. - By window display. This involves putting products in open places where customers can easily see them. - By arranging the goods inside the shop in an attractive manner. - Giving free samples and gifts. - Using sign posts, billboards, neon signs etc. - Through door to door advertising. - Using banners to attract customer’s attention. - Attending trade fares and exhibitions. - Using attractive lighting. - Ensuring packaging of products beautifully. - Giving discounts. This involves giving products at a reduced price. - Branding. This involves giving good names to product to make them distinguished. - Sponsoring social activities and events e.g. sports. - Offering credit facilities. PROMOTIONAL PROGRAMME Whatever an entrepreneur is selling he/she needs to communicate about it to his / her target customers. He / she may do this by the following steps described below. i. Determining who the target customer is. Target customer may be described in terms of consumption habits, sex, age, education levels, income, location etc. it may be done through market survey. This will an entrepreneur to choose an appropriate promotional method. ii. Determining unique features of a product. Once the entrepreneur has established who the target customers are then he/she has to decide on how unique the products will have to be in order to meet the customer’s needs. Uniqueness may be in terms of quality, shape, packing/price etc. iii. Constructing a business positioning strategy. It should be very strategic. iv. Determining the best message to communicate about the product to target buyers. The message communicated should emphasize product benefits other than product features. v. Determining production and advertising options and their costs in terms of available target. DIFFERENCES BETWEEN MARKETING AND SELLING i. Marketing focuses on customer’s needs while selling focuses on the seller’s needs. ii. In selling product enjoys supreme importance while in marketing customer enjoys supreme importance. iii. In marketing there is product planning and development to match the products with the customer’s needs while in selling there is high pressure to sell already produced goods. iv. There is integrated approach to achieve long term goals in marketing while there is fragmented approach to achieve immediate gains. v. In marketing customer’s needs are converted into products while in selling products are converted into cash. vi. In marketing profits are realized through customer satisfaction while in selling profits are realized through sales volume. vii. Marketing is based on customer approach while selling is based on product approach. CHANNEL OF PRODUCT DISTRIBUTION

Channels of distributions are the ways in which products are made available to the customers. Question Explain the types of distribution channels What are the factors considered when selecting distribution channel. TYPES OF CHANNELS OF DISTRIBUTION

i. Direct distribution: This is where an entrepreneur supplies his products directly to customers. ii. Retail distribution: This is a form of distribution where goods are distributed from the manufacturers to retailer who later sell them to customers. iii. Wholesale distribution: This is a distribution channel where goods are distributed from the producer to whole sales who later take them to retailers and finally to final customers. iv. Marketing and selling agents. These are agents who sell products on behalf of the manufactures. They earn commission basing on the amount sold. FACTORS CONSIDERED WHEN CHOOSING A CHANNEL OF DISTRIBUTION. i. The nature of the products: Perishable goods are directly distributed to customers because they can easily get damaged. ii. Reliability of the channel and its image. A reliable channel is always selected when distributing goods e.g retail distribution. iii. Location of the target customers. If the customers are nearly to take business product a direct channel is used. iv. Availability of storage facilities. If the business has enough stores where goods can be kept a a direct channel is used. v. The manufacturer’s distribution policy. Different manufacturers have different policies when distributing products e.g a direct distribution policy. vi. The government policy on distribution. Sometimes the government may dictate the type of distribution channel an entrepreneurs should use. vii. Speed and urgency of the products. Products which are urgently needed, a direct channel is used. viii. Nature/size of the market. A direct channel is used for small market. ix. The availability of the middle –middlemen like wholesalers retailers are always involved if they are available. x. Cost effectiveness. An entrepreneur should select a channel which is cost effective in order to maximize profits. xi. The level of competition. A wholesale distribution channel may be used if there are many competitors. FUNCTIONS OF A WHOLESALER IN THE CHAIN OF DISTRIBUTION. To a consumer - A wholesaler helps the consumer to get steady supply of goods throughout the year. - A wholesaler plays a very important role of keeping the stock of goods and releasing them regularly. - A wholesaler helps in distribution of goods from the manufacturer (producers) to the consumer. - He provides a variety of goods from different producers on behalf of a consumer. - He prepares good for sell by branding, blending, packing them on behalf of the consumer. - He feeds the manufacturer with necessary information concerning consumer’s tastes and preferences. To a producer/ manufacturer - He buys goods in large quantities therefore clearing the producers goods and reducing the risk of thefty and fell in demand. - A wholesaler provides a link between the producer and the retailer. Therefore all opinions, complaints or advise from the consumers are forwarded to the producers through a wholesaler. - A wholesaler provides warehousing facilities for goods brought from producers and do not need big warehouses. - A wholesaler provides transport for goods bought from the producers to his warehouse. - A wholesaler looks for market for the goods bought from the producers to his warehouse. - The wholesaler adds value to the products through branding and blending. - He advertises good brought from the producers. - He looks for the market of the goods from the producer taking them nearer to the retailers and producers. - The wholesaler adds value to the products through branding and blending. To the retailers - He supplies a variety of goods to the retailers. - He gives advisory services to the retailers in concern for his goods. - Some wholesalers extend credit facilities to trust worthy retailers. - Some wholesalers have branches all over the country hence brings goods nearer to the retailers. Question a) What are the services of wholesaler in the chain of distribution b) Under what circumstance may a wholesaler be eliminated from the chain of distribution. UNDER WHAT CIRCUMSTANCES MAY A WHOLESALER BE ELIMINATED FROM CHAIN OF DISTRIBUTION. Due to the problem which consumers normally face with middlemen, sometimes consumers deal directly with producers hence eliminating wholesalers. § If a producer has retail outlets, sometimes producers set up retail shops and sell goods directly to customers. § If goods are large and expensive such a motor-vehicles, furniture, machinery etc. a producer will sale directly to consumers. § Incase large scale retailers buy goods from manufacturers, wholesalers will be eliminated from the chain of distribution. § If goods require minimum handling such as fruit and vegetables, wholesalers may be eliminated from the chain of distribution. § In case where the customers form consumer’s co-operatives, they buy directly from producers. § If goods require technical knowledge for them to use such as computers, mobile phones, television, medical equipment etc a producer may sell directly to consumers. § In cases where consumers buy goods in large quantities such as schools, hospitals, hotels etc. wholesalers may be eliminated from the chain of distributors. § In cases where consumers receive direct services of dentist, a teacher etc. there is no need for a wholesaler. § When the goods manufactured have been branded and packed then it is possible for a manufacture to eliminate the wholesaler. § If manufacturers choose their own agents through which they will distribute their goods to consumers and retailers, wholesalers may be eliminated from the channel of distribution. N.B: An illustration of distribution channel/market flow chart. SANYU BAKERY P.O. BOX 15, KAMPALA TEL:0756220203

QUALITIES OF A GOOD WHOLESALER IN THE CHAIN OF DISTRIBUTION 1. A good wholesaler should be able to manage and control his business well. 2. A good wholesaler should practice good sales man-ship language to act on customers. 3. He should keep proper accounting books for example cashbook, ledger book, and audit his book regularly. 4. He should have large capital to enable him buy a variety of goods for his customers. 5. A good wholesaler should be able to maintain his business for a long time and attract many customers. 6. A good wholesaler should sell goods to his customers at a right price, at a right quality and quantity. 7. A good wholesaler should locate his business as nearer as possible to his customers or retailers so as to present them from moving long distances. 8. He should be pleasant and kind to both suppliers and customers. 9. He should be law-abiding citizen and respect the laws of the business such as paying taxes to the government. SALES PROMOTION AND ADVERTISING Guiding questions a) What is meant by the term sales promotion b) Explain the forms of sales promotion This refers to the activities done to boast the sales of the business products FORMS OF SALES PROMOTION § Advertising § personal selling § Offering samples and free gifts § Renovating business premises. § Ensuring quality production § Giving coupons and business cards to customers § Giving credit facilities § Designing sign posts § Offering after sales services. § Attending to trade fares and exhibitions § Being polite to customers § Offering price reductions/ discount. IMPORTANCES OF CARRYING OUT SALES PROMOTION IN BUSINESS i. It leads to increased sales. ii. It helps the business to become popular and also acquire good will result of the various promotional activities that may be undertaken by the firm. iii. It informs new customers about the availability of the entrepreneur’s product. iv. It helps the business man to gain market share so that he does not lose some of the customers to other business men or competitors. v. It helps the entrepreneur to introduce new product designs. vi. Helps and entrepreneur to constantly remind customers of the availability of the products hence increasing sales in areas of low or declining demands. vii. It creates direct contact between business man and customers. viii. It promotes publicity of an enterprise of an thereby helping the businessmen to outcompete his competitors hence making a lot of profits in the business. ADVERTISING Questions a) What is meant by the term advertising b) State the different advertising media c) Explain the factors considered when selecting advertising media. This refers to giving of information about a particular product to prospective customers to make them more informed and interested in buying it Different advertising media i. Television media

ii. radio media

iii. Print media i.e. newspapers iv. Trade fares and exhibitions

v. Cinemas c). What are the factors considered when selecting advertising media i. Cost of the media i.e. radios are cheaper compared to televisions. ii. Target customers. If the advertising message goes to the youth it’s better to use television. iii. The Age group. Newspapers and radios are better for adults yet televisions are appropriate for the youth. iv. Speed and urgency of the information. Radios are better for urgently needed message. v. Channels of distribution used when distributing products. Its better to use a media which is compatible with the channel of the distribution used when distributing products. vi. The number of people reached by the media. Radios can reach so many people compared to posters. vii. Media used by the competitor. It is better to use a media which is competitive compared to the one used by the competitor. viii. Availability of the media. It is better use a media which is available e.g. radios. ix. The Geographical area to be covered. It is s better to use a media which can take a wide coverage e.g. radios. FUNCTIONS OF ADVERTISING. § It informs the public about goods available on market. § Encourages more customers to buy more products of entrepreneur products. § Creates good relationship between entrepreneurs and customers. § Indicates the benefits which the customer can enjoy after buying products. § It enables the business to retain its market. § It instills confidence in customer about the entrepreneurs’ products § It increases sales for the entrepreneurs’ products due to increased customers § Increased profits due to increased sales. Disadvantages · Expensive and reduce entrepreneur’s profit margin. · Some adverts give wrong information which misleads consumers. · Small firms may be out competed by large firms · Advertising some products like cigarettes leads to social harm and economically runs the consumers. · It may lead to increased prices for products. FORMS AND TERMS OF SALE. They are two major two major forms of sale i.e cash sale basis and credit sale basis. (A) CASH SALE/CASH BASIS This is where immediate payment for goods and services is made. ADVANTAGES OF SELLING GOODS ON CASH BASIS. i. It ensures enough working capital for the business. ii. It saves the business from extra paper work costs which can be involved during credit transaction. iii. It creates low risks for bad debts. iv. It ensures constant supply of business stock. v. It reduces administrative expenses that are association with credit sales and debt management such as hiring credit officers. vi. It allows selling to buyers from to known customers. vii. It facilitates the sale of small items e.g. sweets. viii. It enables flexibility in the business since capital/finances are always available. ix. Extra expenses like legal expenses experienced when handling bad debtors are saved from the entrepreneur. x. It enables an entrepreneur to have ready cash to pay his creditors promptly and obtain cash transaction. DISADVANTAGES OF SELLING GOODS ON CASH BASIS. i. It is convenient to only a limited number of customers with ready cash. ii. It is difficult to operate on cash basis in a very competitive market. iii. It leads to low sales of expensive goods. iv. It is a risky form when selling expensive items like industrial machinery. WAYS OF ENSURING PROPER CASH MANAGEMENT i. By ensuring proper counting and checking of the cash received to ensure that it is correct i.e. that it is the required amount. ii. By recording of all cash sales made. iii. By locking of all the cash received in safe drawers all the time for security reasons. iv. By reconciling all the sales made per day with physical cash collected. v. By banking all the cash received intact on a daily basis. vi. By employing skilled personnel to handle business cash. vii. By carrying out proper accountability of cash expenditure. viii. By limiting unnecessary withdrawing of cash to reduce cash expenditures. ix. By properly documenting all the cash documents for easy reference e.g. cash receipt. (B) CREDIT SALE This involves a seller giving out his / her goods, or providing service to a customer but payment is to be made a future date. Reasons for carrying out credit selling i. To promote more sales and high rate of turn over. ii. To attract more customers who may come to enjoy credit services. iii. To ensure good relationship between the business and its customers. iv. To reduce stock loss resulting from expiry of goods. This is because stock which is about to expire can be given on credit basis. v. To promote repeated purchases from the business customers. vi. To enable the business customers who lack ready cash to acquire expensive goods. vii. To secure enough market for the business products. viii. To create an alternative technique for marketing business products. ix. To increase on the profits made by the entrepreneur on sales. This is because goods sold on credit are always charged highly. x. To create a chance for selling very expensive goods like industrial machines. xi. To ensure enough market for the business products Disadvantages of credit selling i. It’s administratively expensive. ii. It may make the business to run out of working capital. iii. It may spoil the relationship between the business and its customers. iv. At times poor quality goods are sold to customers. v. It creates high chances of bad debts. vi. It limits customers from making their own choices. vii. The business may run out of stock in case credit customers take long to pay. viii. The system is disadvantageous especially during inflationary tendencies when money value is not stable. ix. Hinders business expansion. x. High recovery costs leading to cash problems and shortages. Guiding questions: What are benefits and disadvantages of credit selling to; i. Customer, ii. Seller. CIRCUMSTANCES / CONDITIONS UNDER WHICH GOODS MAY BE SOLD ON CREDIT. i. When goods are about to expire. ii. When sales are low and there is a need to attract more customers. iii. When an entrepreneur has enough working capital. iv. When an entrepreneur can also purchase on credit. v. When there are set standards as regards to credit recovery. vi. When a credit customer has presented a collateral security. vii. When goods are getting out of fashion or expire. viii. In case there is a need to outcompete other business competitors. ix. When the entrepreneur expects prices to fall in the near future. x. If the supply exceeds demand i.e. deflationary tendencies. xi. When the entrepreneur has got the means to know about the credit worthiness of the customer e.g. the customer may get recommendations from other traders of suppliers. xii. When an entrepreneur has insured himself against losses which may result from bad debts. xiii. When goods are very expensive and it is hard to be sold on cash basis. xiv. When the credit customer is well known. xv. When the entrepreneur is operating on a large scale. xvi. In case of dead stock. This is stock which has taken long period before being taken by customers. WAYS OF MANAGING CREDIT SALES i. By ensuring proper documenting of all credit sales made. ii. By setting up short credit periods for the business debtors. iii. By continuously reminding the business debtors their due debts for clearing their dates. iv. By extending discounts to business debtors who clear their debts in time. This will encourage them to make prompt payment. v. By giving reminder notices to business debtors to remind them the due dates for clearing their debts. vi. By extending credit facilities to only well-known debtors with a good historical back ground. vii. By taking legal steps like courts of law for defaulters. viii. Asking for collateral security of a high value.