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« Ozodi Osuji Lectures #23: Introduction to Accounting | Main | Ozodi Osuji Lectures #25: Introduction to Business Operations »

November 09, 2005

Ozodi Osuji Lectures #24: Introduction to Marketing

by Ozodi Thomas Osuji (Seatle, Washington) --- A business produces something (goods and or services) and must sell it to make profit hence remain in business.

An intellectual produces ideas and must sell his ideas to those who desire them to make profits, with which he survives; otherwise he has to go get another job to be able to pay his bills. Some of the so-called intellectuals produce what there are no markets for, and, therefore, cannot sell anything and realistically should not make a living. But instead of going to do what there are markets for, they attach themselves to universities and persuade the taxpayers to believe that they need what they teach to become educated.

Thus, they teach students stuff like philosophy that has no market for it. Their products, graduates, cannot obtain jobs with what they taught them. Unless those who graduated from your field can obtain jobs with what they learned from you, the university has no business paying you to teach what you teach. Of course, you can establish your own academy and teach whatever you want to teach and if there are those willing to come to you and pay you for your services despite the fact that they have no market value that is fine. But tax payers have no business supporting professors who teach subjects that there is no market (demand) for.

SUPPLY AND DEMAND

Marketing studies the market for goods and services. It asks questions like: is there demand for this good and or service? And if so, where is that demand to be found? What kinds of people demand the goods and or services produced by a company? Young people, middle aged people, old people, and children? Where do they live? What is their gender? What are their income levels? How can they be reached, through peers, radio, newspapers, TV, internet, high brow magazines, and low brow magazines such as tabloids, scientific journals like Nature?

TARGET MARKETS

Marketing responds to the above questions and depending on the answers designs goods and services for the appropriate markets. If marketing studies had asked the right questions, and did good marketing research, surveys, and ascertains where the market for a proposed good and or service is, then the producer (supplier) targets that market and sells to it.

Marketing has fancy names such as target market, market segmentation, demographics and so on and so forth. Those are interesting names but they are not particularly helpful in this lecture. In this introductory lecture, what we need to know is that a company sets about to produce a certain good or service and knows that it must sell it and make profits to stay in business. The company must, therefore, ascertain whether there is a market for what it wants to produce or not. Sophisticated corporations undertake market researches and surveys. But the sole proprietor seldom has the resources to undertake sophisticated surveys to find out where his target market is. Instead, he goes with his experience, his hunch as to where he thinks that the market for his goods and or services is. His hunch, if he is any good, is often as good as the findings of professional marketers.

Let us assume that one wants to produce “Bell bottom blue jeans with flair legs”. Who is most likely going to wear this type of pants/trousers? The answer is very simple: young persons under age thirty. One can pretty much predict with a measure of accuracy that those between ages fifteen and thirty are more likely to wear bell bottom pants than folks in their forties and above.

Where are folks in that age range found? They are generally found in secondary schools, universities and technical schools and at the lower ends of career lives. Some of these people still live at home with their parents; others are out on university campuses and college towns in general. If they are working, they are more likely to live in apartments (flats) rather than single family homes. Apartments are more likely to be in the inner city or near it than in the suburbs.

All the above statements are generalizations and, as we all know, there are always exceptions to every general rule.

What is the income level of folks between ages 15-30? Generally, not very high incomes. Of course, some persons at the higher end of this age group are done with formal schooling and are already medical doctors, engineers, lawyers, and so on but, by and large, they are still making entry level wages. It takes years of working in ones chosen profession before one makes the big bucks.

We can also assume that this age group is most likely to be the most educated in extant society. Every generation, so far, tends to be more educated than those preceding it. The present generation, those under thirty, is the most technology savvy generation mankind has ever produced. Most of them were raised on the Internet and know a lot about it.

When all these factors are added up, the producer pretty much knows where his market is. The next question is how many persons are in that market and how many in that market would buy bell bottoms? Not all young persons would buy bell bottoms. There are those from conservative homes where they were told that such pants are associated with musicians and artists and that those are losers in society. There are parents who raise their children to dress in a conservative manner. These young persons are most likely to be found wearing business suits and if in academia, wearing khaki pants, white shirts, tires and jackets. There are young persons who look like they came out of the 1950s crew cut generation.

The point is that not every one in a general market would buy a company’s products. Markets are segmented. The marketer identifies what segments of a market would buy the goods and or services a company is producing.

What is the income available to this market to spend on the proposed goods or services? Can this market afford to buy the goods? Every product takes money to produce it and therefore has a selling price range, selling at which the producer makes profits or breaks even. A bell bottom pant probably would sell for $25 a pair. Do the persons in the age range likely to buy it likely to afford twenty-five bucks for a pant? Smackaroos don’t come easy, you know.

If you targeted the twenty something year old with a Rolls Royce that sold for over $250, 000, the fact is that there will be very few buyers. Aside from a few musicians and sports persons that make that kind of money, the average young person is struggling to survive, and is making survival wage or is at entry level wage in his chosen profession. If you are selling a sports car that sold $25,000 dollars, now you are talking real business, not fantasy.

Bell bottoms will sell in certain markets not others. But then again other variables enter the picture. Fashion comes and goes. Yesterday’s fashion does not appeal to today’s persons. In the future, fashions from yesterday may return, but in the present people are not interested in yesterday’s fashion.

People want something new and different (is there anything new and different under the sun?). My generation, the 1970s, wore bell bottom pants. Then that went out of fashion in the 1980s. In the 2000s bell bottom pants came back in fashion. But, curiously, now it is in vogue with young women and not with young men. At least, I see young college age women wearing bell bottoms with flares but not college aged men wearing them, as we did in the 1970s.

What is up with that? (I am deliberately using slang, for marketers must speak in the people’s language, not the pretentious high brow language of unproductive academe.) I do not know the answer, other than to say that there is no logical reason for fashion.

Fashion has to do with taste and there is no debating why people have the tastes they have. Fashion is what people desire and one cannot explain it rationally.

Perhaps, marketers cleverly marketed bell bottoms to girls but not to boys? And if that is the case why not? Could it be that boys are in a rebellious mood and one way to show their rebellion is to wear pants that are drooping off from the wearer’s waists?

This generation is so controlled that one of the few avenues young men have for rebelling against society is to wear grungy pants that seem to tell adults: I do not care to conform to your dress codes?

Marketing studies the market and ascertains where the market for businesses products will sell. Having done market studies and pretty much decided where the market is, it decides how much money is to be made in that market. How many bell bottoms would be sold? The quantity to be sold, and what price each is sold tells the producer whether he would cover the cost of producing the pants and still make profits.

All businesses want to reach their break even points and make profits. If profit is not to be made, why bother with producing the goods and or services to be sold?

DISTRIBUTION

Marketers further study the way and manner in which the goods would be marketed. There are many forms of distribution: whole sellers, retailers etc. These are technical subjects that we need not bother with here. Suffice it to say that goods have to be brought from the producer to the buyer. In the case of bell bottoms, probably the producer sells his finished pants to a whole seller who then sells them to retailers in certain geographic areas.

The wholesaler goes to the producer and buys his pants in bulk and ships them to retail clothing shops in different parts of the country. Wholesalers have skills in distribution management that we cannot possibly cover here.

Suppose one is in the book writing businesses. One writes a book. One gets a publisher to publish it. The publisher distributes the book through whole sellers who, in turn, distribute it to retailers, and the books are sold in neighborhood bookstores. (In the USA, a few bookstores now pretty much do most of the book selling business, Barns and Noble book stores and Borders bookstores. On the internet, Amazon.com sells books too.)

ADVERTISING

Marketing goods and services involves making buyers aware of the availability of such goods and services. This entails advertising. There is no use producing goods if one does not let those who could buy them know that such goods exist. Thus, goods and or services must be advertised for the general public to know about them.

Advertising is done in many ways, including word of mouth, newspapers (classified pages) magazines, radio, television, Internet, billboards, posters, in our bell bottoms example, dressing the youths that others look up to in bell bottoms (Michael Jordon wearing Nike shoes) so as to get their age cohorts to want to dress like them and go buy such pants.

Advertising can be very expensive. Moreover, different media has different costs. A page of the New York Times could cost thousands of dollars, whereas a page of a local newspaper may cost only a few hundred dollars. It all depends on the newspaper’s reach, how many people buy it and the geographic area it reaches. People all over the USA do read the New York Times and would be exposed to whatever is advertised in it, whereas an advertisement in the Seattle Times reaches only folks in the Seattle Metropolitan area (about two and half million people; the paper’s circulation is in the hundreds of thousands).

In the past, folks used to rely on radio for their news. (Many folks still listen to radio, particularly music radio.) Therefore, they were more likely to hear about classified ads on radio. As far as I know, these days folks mainly listen to radio for music. Different folks listen to different radio stations, depending on their choice of music. Older folks may listen to classical music stations, whereas younger persons may listen to rap music stations. The implication is that the marketer advertises where he thinks that his market, audience is.

(What would be the radio station that a business person marketing bell bottom pants advertise in? Considering that the young wear rebellious clothes and listen to hip hop music, what radio station would appeal to those who want to wear retro 1970s bell bottoms?)

Television is a market that pretty much reaches most people. But most people are not at home during the day watching television. The average man gets up in the morning and prepares to go to work. He may or may not turn the TV on to listen to the news (CNN) as he prepares to go to work. He drives about an hour to reach his work place. He works about nine hours (lunch time included) and drives another hour to get home. He gets home around 6PM and socializes with his family. He may or may not watch the evening news. The chances are that he watches the evening news.

Advertising during the evening hours, 6-9PM is most likely to reach many TV watchers. This means that TV stations are most likely to charge high advertising prices during this so-called prime time. And since this is family time, with children watching TV, not everything can be advertised during this time. Obviously, salacious subjects, especially those with sexual content are not likely to be advertised in the evening (at 1-5AM, may be, for during this time children are sleeping).

Would TVs advertise bell bottoms during prime times? The answer is probably yes, but not in all markets. In the Bible belt, it is probable that the bible thumping people would oppose their children wearing what reminds them of the age of Hippies. Bell bottom pants have the connotation of loose sexuality (remember the free sex era of the 1970s?) and some persons easily associate those pants with sexual looseness and would not want them won around them. Christian fundamentalist churches probably would not want their members wearing such pants?

Young persons are more likely to be computer savvy. Since it is young persons that are more likely to wear bell bottoms, it follows that advertising bell bottoms on the Internet would seem to make sense, wouldn’t you think so? Turn on you computer and go to any search engine and see a good looking young man in a bell bottom and that image is programmed into your head and the next time you go clothes shopping you make “free choice” and buy bell bottoms?

Bell bottom clad young men in beautiful posters splashed all over town is one way to advertise bell bottoms. Bell bottom clad young men splashed in newspapers, magazines and other print media will obviously reach people, particularly if they are published in newspapers and magazines that young people read (college newspapers, Rolling Stones, music magazines etc).

You get the point: goods and services must be advertised in the right medium for the target audience to be aware of them and buy them.

Advertising costs money, so where is that money going to come from? Those glitzy looking pictures in popular magazines cost lots of dough to prepare and publish them. So where is a company to obtain the money for its advertising?

Generally, small businesses do not have large advertising budgets, if they have any at all. Big corporations have big budgets for advertising.

A beer commercial during the super bowl football game for a minute, alone is going to break the budget of many small businesses. So what to do?

Produce goods and services that ones hunch tells one that there is a market for it and do whatever one can do to bring it to the awareness of the public, and hopefully one sells some of them. Only time will determine what would eventually sell and what would not sell. The cost of advertising should not scare the small business person away from producing what he thinks that there is a market for.

Entrepreneurship is all about taking risks. If you have a good product/service and take the risks in producing it and somehow get it to buyers, the chances are that you will sell it. It may take some time before you sell a lot of the product but whoever makes a good mouse trap eventually finds buyers coming to his door steps, but he must have persistence.

As Jimmy Cliff used to sing to my 1970s generation: you can get it if you really want it, but you must try, try and try. Those who give up easily seldom make it in life.

Endurance, persistence and having a good product and or service are what pay off in the long run.

CONCLUSION

My goal in this lecture is not to provide you with thorough information on marketing management. You need several semesters training in the field to understand the subject and working in it to become well versed in it.

My goal is very basic. I want you to know that if you have something to sell that somehow you must ascertain that there is a market for what you want to sell. Remember your secondary school economics: supply and demand? As a business person, you are the supplier of goods, services or ideas. (If you are a teacher you sell ideas). Is there a market for what you supply? Are there people out there willing to pay you money for your goods, services and ideas? If so, where are they and how much are they willing to pay for it?

How much would it cost you to get your product to them (middle man costs)? If you add production costs and middle man costs would you still make profits? You figure all these things out before you even produce the product.

Political leaders are like business men and women. They must understand the economy and know what the people demand.

What do Nigerians want their government to do for them? It is self evident that among other things, that Nigerians desire that their government be realistically structured. They seem to desire a true federation where each ethnic group, so-called tribe, is a state, making for a country with about twenty states.

If the Nigerian government is truly a government, it would supply what the people demand. For example, Nigerians demand free public education, at all levels; free medical health insurance, good roads, electricity for all Nigerians, and good water for all Nigerians.

Politicians, that is, public managers, if they are worth their name, ought to seek ways to supply to the people what they demand. If you supply what the people demand, they will pay for it. If you build good roads people will pay taxes to maintain them. If you build schools parents will send their children to them and pay to maintain them through property taxes; if you build hospitals people will support them through income taxes and so on.

What we have in Nigeria is a failure of will. We do not have leaders in Nigeria. We have chicken masquerading as men (leaders). If these idiots were true leaders, existence gave them the best opportunity to achieve great things for their people.

Imagine the struggle to provide electricity for all Nigerians, building dams every where; power plants every where and so on. These are challenging and exciting tasks and ought to give men a sense of being alive and doing something worthwhile. We have the greatest opportunity to build things and instead we fool around wasting our oil money over seas.

One hopes that sometime our politicians would realize what their function is supposed to be and fulfill it. Their job description is to find out what the people demand and supply them through making public policy choices and finding ways for paying for them.

Politicians make laws and public policies that reflect the people’s public opinion and figure out ways to pay for them (such as taxes, growing the economy etc). Politicians must understand the basics of marketing management. They do not need to become professional marketers, but they need to learn how to figure out what the market, the people, demand and supply them.

My objective in this lecture is to help us understand how we can pay attention to what Nigerians demand of their leaders and produce and deliver them to Nigerians. In doing so, we become real leaders of our people.

Ozodi Thomas Osuji

Ozodi@africainstituteseattle.org

Posted by Administrator at November 9, 2005 01:07 PM

Comments

it is very fascinating
to see marketing well related to politics and governance. i had already wondered, what mr osuji knew about marketing when i saw the topic, until i read the article.
one must give kudos to the writer.
but he should be more subtle in his use of words at describing nigerian politicians. although they need tongue-lashing may be they might change for the better.

Posted by: olumide at November 19, 2005 06:52 PM


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