MARKETING

ABENA OTCHERE DANQUAH

3 BUSINESS 1

17
 MARKETING
Marketing is a management process which identifies, anticipates and satisfies customer needs or
requirements efficiently and profitably.

Marketing as defined by the American Marketing Association is the process of planning and executing,
the conception, pricing, promotion and the distribution of ideas, goods and services to satisfy consumer
needs and meet organizational objectives.

MARKETING ACTIVITIES
Marketing activities include the following:

1. BUYING
Buying is parting with money in exchange for goods or services. It is the duty of the marketing
department in the organization to purchase all the necessary raw materials needed by the
production department as well as stationery for the office.
2. SELLING
This is the most important function of the marketing department. Marketing completes
production in management by making sure that goods and services reach the final consumer at
the right time, place, quantity and quality. It is the responsibility of the marketing department to
sell all the goods and services that have been produced.
3. TRANSPORTATION
Consumers and resources are separated from where they are needed. Raw materials have to be
carried to the factories, whilst finished products have to be delivered to wholesalers, retailers
and consumers. Goods and services are therefore moved from production grounds to where
they are wanted.
4. STORAGE
Storage is another function of the marketing department. Products are stored awaiting demand.
Seasonal products are also stored pending when they will be needed. Also raw materials are
stored.
5. PRICING
Price is the amount of money charged for a product or service. After goods have been produced,
their selling price is determined. This is set at a level which will give reasonable profit to the
company.

MARKET SEGMENTATION
Market segmentation is the process of dividing the total market for a product into sub-markets or
segments, according to one or more bases so that each one of them will be satisfied with a distinct
marketing mix. Through segmentation, a market is able to tailor or develop products and strategies to
appeal to the preferences and unique needs of specific group of customers. The groups of consumers
that a firm intends to sell its products to are called the target market.

In market segmentation, the market for a product is seen as heterogeneous (made of different customer
needs and groups) and not homogenous.
 BASES FOR MARKET SEGMENTATION
1. GEOGRAPHIC BASIS
Under geographic segmentation, the market for a product is divided into smaller units based on
location or geographical boundary or units such as rural, urban, countries, regions, states, cities
or areas. All customers in a geographic area or unit form one segment of the product. The firm
may decide to operate in one or more geographic units. People living in the same geographic
location usually have similar characteristics such as clothing and buying patterns.
2. DEMOGRAPHIC BASIS
Demographic segmentation involves dividing the market for a product using population
variables such as age, gender and family size, number of children, income, occupation,
education and marital status. The main reason for using demographic variables as a basis for
segmentation is that consumer needs, wants and usage rates vary significantly with them. For
example, the advertisement for teens will feature adventure. Also the demand patterns for men
and women differ significantly.
3. PSYCHO GRAPHIC BASIS
This is based on personality and lifestyle of the people. It is based on the way people think about
themselves. This segmentation is based on personality, social class and lifestyle characteristics
of people. This basis deals with the mind of people, what they think of themselves and how they
carry themselves about. People buy products that will enhance their personality and lifestyle.
One may buy a very expensive shirt just to enhance his personality. Another person may not buy
that same shirt even though he has the money to do so due to his lifestyle. People buy certain
specific brands of cars cosmetics and alcoholic beverages just to enhance their lifestyle or social
class and not because they are rich.
4. BEHAVIORAL BASIS
In behavioral segmentation, buyers are divided into groups on the basis of their knowledge,
attitudes, responses to products uses, usage rate and loyalty. Based on these variations, markets
are divided into behavior of people during occasions for purchase and benefits sought in buying
the product. Buyers can be distinguished according to the occasions that they develop the need
to purchase a product. Certain occasions such as Mothers’ Day and Valentine’s Day demand
special products. The demand for chicken goes up during Christmas festivities even though their
prices have been increased. Businesses therefore consider critical life events (occasions) and
meet their accompanying needs. It is the way people purchase product based on occasion and
benefit. Behavioral segmentation is also based on benefits that buyers seek. Unilever has made
“lux” soap for normal skin, dry skin and oily skin. Some buy cosmetics for their strong scent,
others hate strong scented perfumes. Some buy alcoholic beverages because of their strength in
getting them drunk, others buy just for relaxation and enjoyment.
 THE FOUR Ps OF MARKETING
1. PRODUCT
The product touches on the satisfaction of all consumer needs in relation to the goods and
services a firm offers. It includes decisions about packaging, brand names, designs, colour,
texture, shape, taste, consumer services and any other product feature.
2. PRICE
The price element or variable of the marketing mix deals with the amount of money or anything
of value that is used to exchange for goods and services offered. The price must be reasonable
to attract enough customers to the product and at the same time achieve company objectives.
3. PLACE
The place strategies ensure that products are available at the right place, conditions and time to
consumers. The product is put at places that will be convenient for customers hence the term
‘place’ for the distribution component of the marketing mix. The place variable involves
decisions on the way and manner of a firm’s (marketer) product is to be distributed to the
intended target market (customers) to ensure consumer satisfaction and achieve the firm’s
objective. It involves how, where, by whom and when products will get to the consumers. Thus
the movement and storage of products to ensure their availability at the right place, time and
condition is the focus of the distribution element or variable of the marketing mix.
4. PROMOTION
The promotion variable is the communication link between buyers and sellers. It involves the
use of certain tools and activities to inform, educate and convince (induce) present and
potential consumers to patronize a product. It gives information on the nature of the product,
price and distribution strategies of sellers to buyers. The main activities involved in promotion
are advertising, personal selling, sales promotion and publicity. These are four known elements
of the promotional mix.

MARKETING MIX
The marketing mix is a set of controllable variables which firms (marketers) use to develop plans and
programmes to influence and satisfy its target market and to achieve organizational objectives.

The marketing mix is made up of the tools use by a marketer to achieve a firm’s aim of satisfying
consumers at a profit. The variables or the element of the marketing mix are the product, price, place
and promotion commonly called the four Ps because they all start with the letter P.

The elements of the marketing mix are termed controllable variables because they can be influenced,
manipulated and changed by businesses to achieve their objectives. They are used to cope with the
external uncontrollable variables such as taste and fashion, culture, competition, law and technological
changes. A firm can only manipulate the four Ps to cope with these uncontrollable variables.
 NEW PRODUCT
A new product is any new need-satisfying offer of a firm. It is any new thing that can be offered to a
market for attention, acquisition, use or consumption that might satisfy a want or a need.

DIFFERENTIATION BETWEEN A PRODUCT AND A SERVICE

A product is anything that that satisfies human wants and for which a consumer is prepared to exchange
money or something of value for. A product could be goods (tangible) or a service (intangible). A service
on the other hand is one of the classifications of a product. It is the intangible satisfaction provided in
the form of a function performed directly for buyers such as teaching students.

STEPS IN A NEW PRODUCT DEVELOPMENT

1. Idea generation
2. Idea screening
3. Business analysis
4. Prototype development or conceptualization
5. Test marketing
6. Commercialization (launching)

IDEA GENERATION
New product development starts with idea generation for new offering. Idea generation is a continuous
systematic search for new product opportunities. The opportunities are the needs that have not been
satisfied. Analyzing the products offered by competitors can offer ideas (need) for new products or
improvements in existing ones. A formal marketing research can also be done. A firm can also seek
information from sales personnel who are in direct contact with customers. Customers could be asked
questions to identify their needs and wants and also seek ideas from them. Suggestion from employees
and information from distributors and other middlemen are also important sources of new product idea.
The idea may be to come out an entirely new product or an improvement of existing ones.

IDEA SCREENING
This stage is meant to eliminate some of the ideas to reduce the pool of ideas generated to manageable
number through the identification of the most potentially viable ones. This stage also called product
screening weeds out poor unsuitable or otherwise unattractive ideas. The firm can develop criteria such
as marketability, durability, productive ability and growth potential to determine the suitability of an
idea. The test here is whether the idea is going to be profitable and help achieve corporate objectives.

BUSINESS ANALYSIS
This stage is another stage in the screening process. Demand for the product, cost of production and
distribution and profitability are determined. At this stage, the firm tries to see if the idea fits into its
overall company strategies and resources. Initial marketing plans are prepared for the product.
Competitors’ strengths are also estimated. In brief, the firm analysis the product potential and assesses
its ability to use resources available to gain a competitive advantage.
 PROTOTYPE DEVELOPMENT OR CONCEPTUALIZATION
At this stage, the product idea is converted into a physical form. Prototype development involves
product construction, packaging and branding. At this stage, the product concept which only existed as a
word description or a mere drawing is developed into a physical product (copy) or a prototype. Here the
name of the product is suggested. It is also to ensure that the firm’s equipment, machinery and
personnel can adequately cope with the product. It enables a firm to see how the product looks like.

TEST MARKETING
At this stage, a firm makes a few copies of the new product and put them out on a typical market. That
is a market that has the same characteristics as the intended target market. Test marketing is the final
check on whether or not the new product can be put on the market on a large scale. In test marketing, a
relatively small geographical area that is typical (representative) of the entire target market intended for
the product is selected to see the reaction of consumers and distributors under a proposed marketing
plan.

COMMERCIALIZATION (LAUNCHING)
This is the stage that the product is put on the market on a large scale for the first time. It is the
launching of the product and stats the introductory stage of the product. A lot of money is spent in
promoting the product at this stage.

PRODUCT LIFE CYCLE

It is a series of stages that a product goes through in its market acceptance. Product life cycle traces the
route through which a product will pass from the time it is first introduced to the market to the time it
will decline and either be replaced or fade away. After launching the new product, management wants
the product to enjoy a long and happy life. When a new product is launched into the market, it begins its
life cycle. That is introduction stage, growth stage, maturity stage, saturation stage and the decline
stage. The average life cycle of a product differs from the other depending on the demand, economic
and competitive conditions on the market. Therefore, whereas a product may run through a life span of
less than two years, another product may have more than ten years. A product will typically pass
through five stages in its life.

STAGES IN PRODUCT LIFE CYCLE

1. INTRODUCTION STAGE
This stage starts when the product is first distributed and made available for purchase. The
company incurs high cost of production, profits are also negative or low because of the low sales
and high distribution and promotional expenses. Promotion spending is high to inform
customers about the new product and get them to try it. There are also few competitors at this
stage. Customers aren’t looking for the product. They don’t even know about it. The marketing
strategy here is that, promotion must be more informative, persuasive and educative.
Information promotion is needed to tell potential customers about the advantages and
advantages of the new product concept. With regards to pricing the marketer may decide to
 adopt the skimming pricing or penetration pricing. The pricing method to adopt depends on the
distinctiveness of the product.
2. GROWTH STAGE
From the birth stage, the new product emerges into the growth stage, which usually brings
gradual reduction in cost and an increase in sales and profit returns. Competition usually starts
to set in the market. The firm uses several strategies to sustain rapid market growth and these
includes improving product quality, enter new market segments, enter new distribution
channels, shift advertising from building product awareness to building product conviction and
purchase.
3. MATURITY STAGE
There is keen competition at this stage as many competitors have entered the market.
Competition is at this stage. Sales continue to rise but more slowly. Demand reaches its
maximum level. Profits decline as promotion costs climb. Prices soften further as competitors
begin to cut prices to attract business. The marketing manager should consider modifying the
product, market and marketing mix.
4. SATURATION STAGE
This is a continuation of the maturity stage. It is a stage in the product life cycle where the
market is flooded with many of the products that the market can no longer absorb additional
production. Here, sales stagnate. Profits shrink. Mass market begins to evaporate. Demand
therefore declines and prices fall. Further increase in production will call for change in pricing.
5. DECLINE STAGE
Sales decline permanently. Profits may plunge into zero or they may drop to a low level and
continue there for some time. The product may die out of the market or may be withdrawn
from the market. Many customers leave the market and products with strong customers’
franchise may make profit.
6. EXTINCTION STAGE
This is the last stage in the product life cycle where the product is no more in existence. The
product dies out of the market because there are no customers or no demand for it.

PACKAGING
Packaging can be defined as various facilities in which a product can be found. Packaging
compromises all the activities that are related to designing a container that a product can be
found in. It is the physical container or wrapping for a product. Packaging promotes and protects
the product. It is important to both buyers and sellers. It can make a product more convenient
to use or store. Good packaging makes a product easier to identify. Packaging gives a way to
present products to potential buyers. A new package can make the important difference in
meeting customers’ needs. For instance, a better box, wrapper or bottle may help create a new
product.
 FUNCTIONS OF PACKAGING
1. Packaging facilitates promotion. It creates awareness and appeals to customers’ specific needs
and preferences when the packaging is attractive. It serves as a promotional tool and ready
acceptance of a product.
2. There is easy identification of a product. Packaging helps with the differentiation of a product
from other competitive ones. This prevents substitution of products by customers. It helps to
differentiate a company’s product from that of others. It establishes product differences.
3. Packaging gives protection. It gives protection to the products from the producer through the
middlemen to the final consumers. It protects the product against contamination, pilferage and
chemical change. It gives protection to products such as glasses and eggs which are very fragile
during transportation.
4. Packaging gives convenience to a product user. Packaging offers convenience to the consumer
when bottles, cans and boxes are used. It promotes easy opening and re-opening without the
product being destroyed or damaged.
5. It serves as utility factor. Thus, after using the product, the package can be used for other
purposes.

THE USE OF BRANDING IN BUSINESS

Branding means the use of a name, design, mark or symbol or a combination of these which an
organization uses to distinguish its products or services from others. It includes the use of brand names,
trademarks and practically all other names of product identification. A ‘brand name’ refers strictly to
letters, words or a group of words which can be spoken. A “trademark” is a legal term covering words
and symbols which can be registered and used by a single company. A legally protected trademark is a
valuable asset to a company.

In a business, branding reduces personal persuasive selling efforts, it facilitates self selection, it leads to
more ready acceptance of a product, it helps other products of the firm to be introduced easily, it gives
security and it creates monopoly for the product.

PRICE
Price is the value at which a product or service is to be sold. It is the value of the product expressed in
monetary terms. Thus, it is what is exchanged for ‘something’. Price is an important component in the
marketing mix because it determines the success or failure of a product. Price determines the profit and
sales volume. For a firm to survive or expand, it must charge a price to cover total cost of production in
the long run, and to produce a reasonable return on capital.

PRICING POLICIES
1. SKIMMING PRICING
This refers to the practice of selling a new product at a higher price with a view to take the
‘cream’ out of the market before reducing prices later. It aims at maximizing profits at the
introductory stage of a product especially if there is little or no competition.
2. PENETRATION PRICING
This policy tries to sell a product at a low price. It is used to discourage competitors from
entering the market. It uses low prices to sell if competition is very keen. It is effective if the firm
produces in large quantities.
Introductory price dealing is different from penetration pricing. The latter is a temporary price
cut or reduction in order to speed new products into the market with the aim of increasing
prices after the introductory period.
3. ONE PRICE POLICY
This means offering the same price to all customers who buy goods under the same conditions
and in the same quantities. Thus, one price is fixed for customers who buy the same quantity of
a particular product and operate under the same conditions.
4. BREAK-EVEN PRICING
With this technique, the producer prices the product or service in such a manner that there are
neither profits nor losses. The aim is to fix a price that covers cost.

FACTORS AFFECTING PRICING DECISIONS

1. COMPETITION
Pricing under this approach is on the ‘going rate’. Thus, prices of other related goods serve as a
guide. It is normally used when market conditions are highly competitive.
2. GOVERNMENT POLICIES
When price control mechanisms exist then the government determines the price of a particular
product in question and no other firm can charge otherwise. All firms comply whether the said
price is favorable or not.
3. CUSTOMER DEMAND
This deals with the elasticity of demand for a particular product. Price determination is often
influenced by this. Thus, if a product is price elastic, price will be relatively lower than a product
which is price inelastic.
4. CUSTOMER REACTION
The reaction of customers towards price affects pricing. If customers are insensitive to price,
firms take advantage and charge high prices. On the other hand, if customers are sensitive then
lower prices are charged by firms.
5. THE MARKET STRUCTURE
The type of market in which the organization operates is an important factor in pricing. Pricing
will differ in the following market situations; perfect competition, imperfect competition,
monopoly and many more. For instance, a high price may be charged by a monopolist whilst a
perfect competitor may charge a low price.

PRICING OBJECTIVES
1. TARGET RETURN PRICING OBJECTIVE
A target return objective sets a specific level of profit as an objective. The target return is
normally on sales or capital investment and is expressed in percentage. For instance, 25% return
 on sales or capital investment. This can be a return that ensures the firm’s survival and
convinces stakeholders that the business is doing a good job.
2. PROFIT MAKING OBJECTIVE
This seeks to get as much profit as possible. The price level is kept at a point that profit is
maximized. Thus, profit maximization does not mean high prices. Low prices may expand the
size of the market and result in greater sales and expand the size of the market and result in
greater sales and profits.
3. SALES ORIENTED OBJECTIVE
This objective is more concerned with increasing sales than making of profits. The primary aim is
to increase sales which would eventually increase profit.
4. MEETING THE POCKETS OF THE AVERAGE INCOME EARNER
This objective aims at making goods and services affordable to the average income earner.
Secondly, it aims at improving the standard of living of the average person. State-owned
enterprises are very good examples of such organizations.

PROMOTION
Promotion is communicating information about a firm’s product or service to potential buyers in order
to influence their attitudes and behavior. Promotion is to communicate information that will encourage
customers to choose an organization’s product or service. It involves activities such as personal selling,
sales promotion, advertising and public relations. The primary aim of promotion is to tell potential
customers that the right product is at the right place at the right time.

REASONS A BUSINESS SHOULD PROMOTE ITS PRODUCTS

1. TO INFORM PRESENT AND POTENTIAL CUTOMERS
In order to obtain action from present and potential customers, information about a firm, its
product, price and distribution is communicated to them. Consumers must be given information
about a product to create awareness so that they a can buy. Prospective consumers will need
information on availability of goods, its price and how they can get it. Any other information
concerning a firm is given out through promotion.
2. TO PERSUADE CONSUMERS TO BUY A FIRM’S PRODUCT
Consumers need to be convinced about the qualities and attributes of a product. Promotion
draws attention to the product, develops interest in customers and arouses their desire to buy.
Promotional tools such as advertising are used to convince customers and make them move
from competing products.
3. TO EDUCATE CUSTOMERS ABOUT PRODUCTS
Through promotional activities such as personal selling and direct marketing activities such as
brochures and instructional manuals, customers are educated about the products of a business.
The education is on the uses and benefit of products so that the consumers would derive the
maximum satisfaction from products.
4. TO REMIND CUSTOMERS
Promotion reminds customers about the existence of a product, its producer and its benefits.
The aim here is to keep the product in the mind of consumers so that they would continue using
the product despite competition. It keeps the consumers of a firm loyal to it.

TYPES OF PROMOTION
1. PERSONAL SELLING
Personal selling is communication between a sales person and a potential customers regarding
the firm’s product or service. It is a face-to-face selling activity between a salesperson and
customers or an individual salesman selling to customers. Personal selling allows for easy
identification of customer’s problems, getting orders from customers, handling of customer’s
orders and providing technical support after the sale. Promotion means communicating with
potential customers and it is said that personal selling offers the best way to do it. It is very
responsive to the needs of customers.
2. SALES PROMOTION
This refers to provision of special buying incentives to induce sales for a limited period of time.
Sales promotion is flexible. Thus, a scheme or method can be employed quickly to curb a
declining market. It is a short-term promotion technique to promote sales. It is intended to aid
advertising and personal selling. Some of the methods of sales promotion are discounts, gift
calendars, samples, bonuses, catalogues, trade fairs, coupons and sales contests. When
choosing a particular sales promotion type or method, the company’s image, objective, cost of
activity, middlemen or customer enthusiasm and participation requirements are factors
considered.
3. ADVERTISING
Advertising is defined as any paid for of non-personal communication directed at target
audiences through various media in order to present and promote products, services and ideas.
Simply, it is any form of non-personal presentation of ideas, goods or services by an identified
sponsor. It is the publication of facts or opinions about goods and services with the ultimate aim
of increasing sales. Advertising communicates about the existence of products, their quality and
uses in order to get the public interested in them to persuade them to buy. It includes the use of
media such as magazines, newspapers, television and radio.
4. PUBLICITY
Publicity is any unpaid form of non-personal presentation of ideas about goods, services, places
and people. Publicity is not paid for and the firm has no control over the messages, place and
time. It has more customer attention, reaches a lot of people and is most often reported in
independent media such as magazines, newspapers, radio and television.
5. PUBLIC RELATIONS
Public relations is defined as the deliberate, planned and sustained effort to establish and
maintain mutual understanding between an organization and its public. It is the way in which an
organization wins confidence with the public at large. It is concerned with the promotion and
acceptance of a company and its products. Public relations is a means of informing
shareholders, customers and the general public of an organization’s operations and its products
 through the press, journals, radio, magazines and television. The public relations officer is the
link between the organization and the general public and must have a good knowledge of the
various media disseminating information.

CHANNELS OF DISTRIBUTION
Channels of distribution is simply defined as a series of firms or individuals who participate in the flow of
products from the producer to the final user or consumer. It is also the set of firms and individuals that
take title to a good or service as it moves from the producer to the final consumer or industrial user. It
therefore refers to the system of marketing institutions like merchants, agents, wholesalers and retailers
who help transfer goods or services from the original producers to the final users or consumers. A
channel of distribution is said to be short and simple when there is direct supply of the product from the
producer to the final consumer. On the other hand, a complex and long channel of distribution is the
one that involves bringing institutions like wholesalers, retailers, agents and distributors which operate
between the producer and the consumer.

FACTORS IN SELECTING A CHANNEL OF DISTRIBUTION

1. PRODUCERS’ OBJECTIVE
The place objective of the firm must be considered before designing a channel of distribution for
the product or service. For example, if the producer has an objective of preventing the goods
from changing many hands and therefore bringing a wide margin between the producer price
and the retail price, then he should be influenced by this objective to choose a simple and direct
line of distribution.
2. FINANCIAL RESOURCES OF THE PRODUCER
A producer who is financially capable can use his own salesmen or open his own retail outlets
and therefore use shorter channel, while a producer without adequate capital uses a longer
channel.
3. NUMBER OF POTENTIAL BUYERS
If the number of potential buyers is small, the producer would use shorter channel but if it is
large, the producer uses all the middlemen, that is, longer channels.
4. COMPETITION
At times, the nature of the competition in the market may influence the selection of the channel
of distribution. For example, in a situation where competition is very keen, producers may
undertake direct sales especially in areas where competitors cannot afford to go.

FUNCTIONS OF WHOLESALERS
1. Wholesalers provide part of the producers’ selling functions. They sometimes seek supply
sources and thus decreasing the number of salesmen the producer needs.
2. Some wholesalers may provide inventory. This reduces the manufacturers’ need to carry large
stock of finished products and thus reducing warehousing expenses.
3. They may participate in the producers’ advert and sales promotion programme by informing
consumers of the types of utility got from the use of the product.
 4. The wholesalers also provide market information to their producers. The wholesaler is close to
the consumer and he is therefore in a better position to evaluate customers and also conditions
in the market.
5. Wholesalers help to finance their producers by either owning stock r shares.
6. Wholesalers also reduce risk. A producer’s customers, for instance, retailers may be numerous
and it is quite expensive for a producer especially one far distant to evaluate or access the credit
worthiness of such a group of customers. The wholesaler who sells to these customers is in a
better position to evaluate their credit worthiness.
7. Wholesalers absorb risk by taking title and bearing the cost of theft, damage and spoilage.
8. Wholesalers save their customers money by buying in car load lots and breaking bulk.

FUNCTIONS OF RETAILERS
1. BREAKING BULK
Retailers save their customers money by buying in bulk from wholesalers and breaking them
into convenient sizes and shapes. They therefore make goods available at reasonable prices.
2. FINANCING
Retailers finance their customers by giving them credit. Reliable customers enjoy the product
before paying.
3. WAREHOUSING
Retailers hold inventories, thereby reducing the inventory costs and risks of wholesalers and
suppliers.
4. SELLING AND PROMOTION
The retailer helps the wholesaler or manufacturer to reach many small customers at a low cost.
The retailer has more contacts and is often better trusted by the buyer than the wholesaler and
manufacturer.
5. MARKET INFORMATION
The retailer plays an important role by collecting market information from the customers to the
manufacturer. He gives information about competitors, new products and price developments.
6. BUYING AND ASSORTMENT BUILDING
The retailer can select items and build assortment needed by his customers, thus saving the
consumers much work.

E-COMMERCE
It describes the buying, selling and exchanging of products, services and information via computer
networks, primarily the internet. It also refers to business activities conducted using electronic
transmission over the internet and the World Wide Web (WWW).

IMPORTANCE OF E-COMMERCE TO BUSINESSES

1. It expands the company’s market place to national and international market. With minimal
capacity outlay, a company can e best suppliers, quickly locate more customers, the best
suppliers, and the most suitable business partners worldwide.
2. It enables companies to procure material and services from other companies, rapidly and at less
cost.
3. It shortens and eliminates marketing distribution channels, making products cheaper and
vendors’ profits higher.
4. It provides an inexpensive avenue to promote a firm and its products to current and potential
customers.
5. It allows a firm to profitably serve small markets.