CERTIFICATE IN SALES AND MARKETING

INTRODUCTION TO SALES AND MARKETING

Norman Sike Institute

Mt Hagen

A macro-marketing view showing the cultural and historical development of societies in the world from dictatorship to modern democracy

Bruce Copeland BA BEdSt

COURSE TIMETABLE

Week 1                      General world affairs

Week 2                      General world affairs

Week 3                      Traditional exchange of goods and services

Week 4                      Modern Use of Gold

Week 5                      Marketing as wide as the world

Week 6                      Test

Week 7                      Setting prices on the world market

Week 8                      Resources Diplomacy on the World Market

Week 9                      Mid term test

Week 10                   When everyone sells the same product

Week 11                   Marketing of services

Week 12                   Coca Cola or Pepsi?

Week 13                   Scams in marketing

Week 14                   Problems of marketing in PNG

Week 15                   Test

Week 16                   Revision

Week 17                   Final Exam

Study Schedule over 17 weeks

Chapter 1 – Hierarchy of Human Needs.

The human race survives by satisfying its basic needs. This has been set out by Abraham Maslow many years ago with his Hierarchy of Human Needs. 

There is a range of needs with the most powerful having a major effect. As one need is satisfied, it becomes less important while other needs come up and become motivators of our behaviour.

At the very bottom of the hierarchy  are the physiological needs which include the need for water, food, salts, warmth, soap, medicine, exercise, sunshine, rest, shelter, rest, relaxation and health.

All of these require us to obtain drinks, fruit, vegetables, meat, clothing, shoes, medicine for all kinds of illness, tools for gardening, blankets, pillow, detergent, mosquito net.

We need security, social support and self awareness. There are organizations offering such benefits and these include churches, care groups, women’s groups, youth groups.

There are also scam groups that offer such benefits through marketing. We have con-men and women who offer herbs to cure HIV/AIDS and every known ailment. We should all be careful.

Chapter 2  Traditional exchange of goods and services

From early times, primitive people needed food, clothing, weapons, medicines and fibres for ropes and covering for shelters. Much of this was obtained from the forests and rivers and brought home for the tribe and family.

Surplus goods were distributed on an exchange basis. Family members had surplus in other commodities which were exchanged. A bag of fruit was exchanged for sweet potatoes. Two large fish were exchanged for a piece of wild pig.

This was the barter system and has continued in some cultures to the present day though supplemented by the money system. People sold goods and services for money on the basis of value. A large watermelon had the same value as a bag of oranges. This value today may amount to 35 kina.

People prefer money as this is easier to carry around than a large watermelon or a bag of rice. Money can be saved up to buy more expensive goods and services. In the modern world, money can be used to deposit in banks and pay water bills to Eda Ranu. There would be little interest in paying a water bill with 20 large watermelons !!

There was an exchange along the north coast and islands of New Guinea and the Solomon Islands in centuries past known as the Kula trade. Villagers travelled along the coast and through the islands trading and exchanging Kula shells that were redeemed in later voyages.

As long as 3000 years ago, there was a money economy throughout Europe and Asia. Early money was made of precious metals of gold, silver and copper. The more expensive coins were made of the most valued metal which was gold.

Coins were minted in the Roman Empire and are still excavated today with the head of the emperor on one side. Before that coins were minted in ancient Babylon in the present middle east of Iraq and Iran.

The most valued metal has always been gold. But the function of gold has changed over the centuries. Gold today is more for decorative jewellery and ingots of gold stored in national mints such as Fort Knox in The United States.

Today, gold in Fort Knox is not moved from country to country. The gold of nations sits in piles to be moved around to cover national debts. Countries use gold to strengthen their currency.

In the 1500s, we saw the value of gold to Spain. This country was part of the build up of nation states of Europe. But Spain did not have a strong economic and industrial infrastructure. The King of Spain had always heard of the El Dorado in the west of the known world. This was the land of gold.

The first Spaniard to venture to the west was Christopher Columbus who had the strange idea that the world was round not flat. Ships and men would not be lost if they ventured beyond the horizon to fall forever through the darkness of space. His two ships the Nina and Pinto sailed across the Atlantic to the great fear of the crew.

Columbus believed that he could reach India by sailing west across the Indian Ocean. But the ships arrived at a group of Islands that Columbus named the West Indies, believing that they would soon have landfall in India.

He was wrong but the name has stuck. He sailed further and soon made landfall on a large island that was really the east coast of America.  He met brown skilled men and women whom he called Indians.

Columbus died on his voyage and was followed by a Spanish adventurer Cortez who was living in Cuba. He recruited ship crew and soldiers and sailed to the east coast of Central America in what is now Mexico.

He met friendly Indians and was given gifts by the Indians while his men gave them syphilis, measles and influenza. Cortez sent a ship back to Spain to report to the king from a settlement he had set up in Cuba. The king sent more ships and soon Cortez was venturing down to Central America to find the El Dorado or land of gold.

He wanted to send gold back to the King of Spain to assist in the process of nation building. On making landfall in Central America, he met friendly Indians who told him of a hated civilization living in a city 200 miles inland named Tenochtitlan ruled over by a god king Montezuma.

Over the next 12 months, he had come to the city, fought with the soldiers of the king Montezuma and taken massive amounts of gold in the form of statues that his men melted down to bullion. During the fighting hundreds of Spaniards were killed and the king Montezuma struck down by a rock thrown by one of his subjects.

Much gold was melted and much was lost in the fighting. But the gold found its way back to Spain as part of the Kings fortune and the process of nation building. Many ships came to carry gold in the form of coins and bullion and many were shipwrecked on the way across the Atlantic Ocean to Spain.

Today there are still explorers and divers who have found many wrecked Spanish galleons and billions of dollars of gold.

Gold has always been recognised by the people of the world as the most precious of metals. Archeologists in Egypt have found massive amounts of gold in the tombs of the pharaohs, used to make coffins. Think of the coffin and headpiece of the boy king Tutankhamen. The gold was to be used by the pharaoh as money to be used in his afterlife.

Much of this gold probably exists today as part of the bullion stored in the US Fort Knox. Little is wasted but kept throughout the millennia. The value of gold continues.

Chapter 3   Modern Use of Gold

In the world today, gold is still mined in countries spread far apart from South Africa and Papua New Guinea. It is sold on the world market and bought by private individuals and Government. The value of gold varies according to the price on the world market.

When the world is going through financial difficulties, the trend is for nations to convert their currency to gold. Modern currency is just paper when all else fails. Gold is gold forever and its value will fall but rise again.

Gold is no longer wasted on coinage. There was a time with the English sovereign when the coins seemed to be getting smaller. That was because people used to scrape gold from the coins to be smelted into small amounts of bullion.

Today, the currency of any country is backed by gold and other precious metals such as silver and platinum. When the nation is prosperous, the market on currency widens. Money makes money.

But when there is a decline in the world economies, most countries rush back to buy gold. Do they hold the gold? They most likely let it stand in their pile in the world gold reserves such as Fort Knox in the United States.

Hostile countries have their own sites to hold gold. There is yet another source of financial stability in the form of oil. Countries like the USA have millions of barrels of oil in reserve. Japan will have the same, not wanting to be caught short as in the lead up to World War 2. Russia gets its large reserves by pipeline from China.

We saw nations fall with a lack of gold reserves. The two most spectacular falls were post World War 1 Germany in the Weimar Republic and in Kuomintang China in the 1930s. Both countries were financially down and tried to build up without gold reserves but by printing money.

Money had no value. This meant that to buy a newspaper the customer would hand over the equivalent of K7000. People carried money in wheel barrows. The same occurred in China causing massive poverty and a great boost to Mao Tse tung and the Communist Party.

This is a situation called hyper-inflation. This is massive inflation up to 800% higher than normal. The inflation of PNG is less than 10% and not high.

We saw the same situation in Indonesia after World War 2 and the independence of the nation. There were no gold reserves. Perhaps the Dutch had taken it all back to Holland if they had any in the first place.

Soekarno did not know what to do. He printed money but that made the situation worse. One day he made the announcement that all notes were to be cut into two and the two halves became the value of one. That caused absolute chaos.

Inflation is controlled in the world nations by the Central Banks.  When the inflation is high, the reserve banks know that there is too much spending. So the interest rates on loans are lifted particularly on houses bought by consumers. When spending drops, the inflation drops.

When the economy is improving, reserve banks authorize more consumer spending to allow the economy to return to normal. This is done by lowering interest rates and allowing spending to rise. Marketing increases for all products from houses, cars, property and business spending.

The longer the nation cannot afford to buy cars, the sooner the consumers have to buy hundreds of new cars, provided they are being employed. The more cars needed the more cars have to be manufactured. Sadly more cars have to be imported and we are back at the start.

Papua New Guinea has problems with inflation. It too is controlled by the Bank of Papua New Guinea. Sadly this country relies on the sale of minerals that depends on the overseas markets wanting to buy.

The nation depends on cars and machinery from overseas markets. Every car and truck on the roads of the nation means money going back to Japan.

Chapter 4   Marketing as wide as the world

Before we talk about marketing in Papua New Guinea, we have to see the world picture of daily marketing on the stock exchanges of the world. This is where the nations of the world regulate themselves.

Much regulation is covered not with gold but with bonds. An economically strong economy can deal in bonds not gold. When bonds are being sold, it means the investors are worried and falling back on the strong economic base.

The National Newspaper has a Business page that sets out the movement of world markets. We read on one issue of newspaper in 2014 the following:

What is your kina worth?

Stock movement

Commodities

Modest gain for Australian shares

A$ remains just below 94 US cents

Australian bonds futures prices strengthen

Wall street lower

Euro stocks fall

Nikkei stocks fall

Hang Seng up

Bonds are promissory notes issued by the Government. These will be paid out by the Government. The only way for these not to be paid out is if the Government ceases to exist. Bonds are bought by organizations that are afraid that the economy will fall.

Stocks and shares are bought by people who then become part-owners of the company. These may be sold on the stock market at a profit. If the company fails and becomes bankrupt, the stocks and shares are the last to be paid out often at a reduced price.

There is a broad picture being shown of the world market on the business page. As an Australian, I check the value of the kina 65.03. That means that the value of the kina is rising or the value of the dollar is dropping. That means that money going to Australia will be less. Money from Australia is rising a little.

The Australian currency is still firm against the US dollar. But the Wall Street shows a steady value of the US dollar. The situation in Japan is not good with the country on the verge of recession. The Hang Seng market in Hong Kong is strong still. There is no word on China whose economy is dropping.

Please bring The National into the class.

Chapter 5.  Prices on the World Market

Let us read the Business page further. We check commodities of light crude oil, natural gas, gold, copper, sugar, coffee and cocoa. These will be important prices to be followed by sellers and consumers on the world market.

These prices are not determined in Papua New Guinea but by commodity brokers across the world. They will want to make sure that commodities are bought as cheaply as possible and sold as dear as possible.

At the present time, the world is being worried about the continued drop in the price of oil. This is causing problems to the Middle East nations as the ghost of world recession continues. Industry is slowing down across the world which means a drop in the need for oil and LNG. This will affect Papua New Guinea.

If the industrial growth of China slows down more, there will be a drop in Australian orders for coal, iron and oil. Some people say this is good given the world global warming. But it will mean a drop in Australian employment.

The greatest threat to the world of oil came with the Israeli-Arab war in 1973. There was fierce fighting to the point that Israel invaded and occupied the land to the west of the Jordan River. They have never given the land back to Jordan and continue to build settlements.

The land of the Golan Heights was taken. This was where the Syrians used to place artillery to shell Israeli settlements. Israeli settlements or Kibbutzes had deep shelters to which the people ran from the fields when the siren sounded. Children slept in the shelters at night.

The Israelis destroyed the Egyptian army and were ready to drive the army up the streets of Cairo. But it all ceased  when the Arab oil countries stopped the supply of oil to all nations supporting Israel. The first nation to break was Japan that told the Israelis to withdraw back over the Suez canal. Other nations followed. A new era of oil marketing had begun.

This is resources diplomacy in its extreme form. Routine diplomacy in marketing occurs between nations. One agrees to buy consignments of wheat if the other agrees to buy vehicles. One will buy a neighbours oranges if the neighbour buys mutton.

The Arab nations set up the Organization of Arab Petroleum Exporting Countries (OAPEC) and decided the new price of oil. This was an exercise in international price fixing. Suddenly costs for us all went up over the world. OAPEC nations became rich as massive incomes came from the industrial world.

Many Arab countries did not have the means to absorb their new capital. So many invested in the industrial world. Arab sheiks bought airlines, shipping lines and hotels over the world. The OAPEC then became OPEC and added Nigeria and Venezuela. These countries are now being pressured by the Moslem extremists.

Chapter 6  Resources Diplomacy over the world market

Developing countries have difficulty in selling their raw materials if the client nations across the world have got together and set the buying prices. It may happen one day with LNG as we find that a number of nations are producing LNG.

Another strategy for the buying nations is to make sure that they do not depend on only one producer who can put pressure on for higher prices. So buyers make sure they have several sources of raw materials.

If one producer makes a demand for higher prices, the buyers can stop the contract. If the sellers decide to weaken and go back to the buyer, they may find that the price will have dropped at the hands of the buyer. They have been punished.

Criticism has been made of many developed nations that work to keep the developing countries poor with protection policies by which certain products are blocked and prices for commodities are kept low.

The developed nations have a great advantage in the high technology products they sell to nations overseas. Military hardware has to be bought from neighbours that can be trusted to be friendly. There is no value in buying war supplies that are also being bought by the enemy. There can be no bargaining on the world market for military supplies.

Chapter 7   When everyone sells the same product

When so many people or companies are selling the same product, it becomes a buyer’s market. That means that the sellers cannot command the prices or amounts sold. The buyers can enjoy a cheap sale from sellers desperate to sell.

We see this in Papua New Guinea markets with a long line of people selling betel nut. All are selling at the same price. There is no motivation for the buyers to go to any one seller. The only hope is that the wantoks will buy from them.

There is a lazy way of selling in this country. It is based on the fact that if we take a whole product and break it up, we can sell the pieces at a price higher that what we bought the product for.

So people walk around with a packet of cigarettes, selling one at a time. It may mean that they can make K3.00 a packet. That is a lot of packets to buy food for the family. II is sad that the only talent this person can have is to sell cigarettes or lollies one at a time.

So too with pineapple pieces. A full pineapple may cost K4.00. The pieces may be sold for K6.00. We see the same with cans of Coca Cola and packets of lollies. If we move around, we may be able to sell, particularly along a line of cars waiting at the traffic lights.

Chapter 8  Marketing services

Not only do products find a market. Services can do so as well. A women’s group can market a message on violence of men to women. The Health Department can market the proper treatment for tuberculosis and avoidance of HIV/AIDS.

The Kumuls football can market the value of team work, the team as a group of young PNG men, respect for women. They can market the value of commitment to team work and support for the disabled.

Air Niugini can market safe travel, holiday venues, exotic trips to other countries, frequent travel, concessions for special groups. They also market to other countries for access to air routes, access to airports and airport lounges, concession international fares and luxury one stop travel.

Chapter 9  Coca Cola or Pepsi Cola

We all know which drink we prefer. It is a personal thing. I am an older man who was born after World War 2. I still recall the singing sisters in US uniform singing Drinking Rum and Coca Cola.

Coca Cola is part of my childhood. It has a red coloured can with the words in old fashioned writing of my childhood. I recall old fashioned advertisements in American magazines on the refreshing taste of Coca Cola. It has a culture behind it.

On the other hand, Pepsi has none of that. It has no history and no culture. It is said not to have the secret formula held by Coca Cola. In Papua New Guinea, both drinks are sold in the same shops.

Chapter 10  Scams in Marketing

In the modern era, there are many tricks that can be played on people by dishonest marketing. The old trick is for the seller to take the money with a promise to return with the product or to carry out the advertised service. But they never come.

There is always danger in sending money for a product to an address in the newspaper. Chances are that the customer will lose the money and never receive the product. A potential buyer must examine an advertisement carefully as many are designed to be accepted by stupid people.

An advertisement is a fake if there is no address. The company is not real. It is called United Distributors International. It is not a registered company. There is no address for a customer to visit. The address of P.O. Box 2563 Boroko is not an acceptable address.

There is no phone number. If there is, it is a mobile phone which means that the seller can say he is in East Boroko when he is really in Wewak.

There are trick marketers in Port Moresby selling AIDS cures with treatment by bottles of herbal medicine. The claim is that the medicine has cured 130 people. This claim has no proof.

When a person approached the seller, was there an AIDS test? The person bought 5 bottles over 6 weeks for K150. In the end, they say they feel better. The AIDS con-man then claims they are cured. No pre-test. No post-test. It may be the person was not HIV positive in the first place.

Internet brings tricks from people trying to steal money and ID of other people. Over recent years, there has been a series of emails come from Africa.

The person claims to be the widow of a senior executive officer of Idi Amin who was given the job of looking after $20 billion of Idi Amin. Now he has been put in prison by the new President who does not know about the huge deposit in the Bank of England.

The victim is asked for assistance to get the money out and deposit in the victim’s bank account. The reward will be $2 billion in an account. Could you please give me your bank account number and credit card number so that I can make the transfer. The victim is assured that it will all be confidential.

There is a technique on Internet called phishing by which the con-man puts out a fake letter head of a bank and then sends to victims on internet.

They say they are doing checks of all customers to protect them from internet fraud. Please send us your credit card number and internet pass-word. This is a trick to steal identity and take money from the account of a victim. Identity theft is a very damaging trick against a victim.

Chapter 11   Problems of Marketing in Papua New Guinea

There are problems in marketing at all levels in Papua New Guinea. This country has a large rural areas where village people grow crops to sell. There are village markets throughout the country where people sell their products.

There can be problems of access to markets with landslides, road blocks by villagers, flooded rivers, bridges washed out and ships not arriving. Many people come to the main markets with truck loads of bags of kaukau or other vegetables. They leave the bags in the market overnight and risk having the produce stolen.

The banning of betel nut in Port Moresby has brought many problems to sellers who risk being arrested and attacked by the police. The NCDC has passed a law banning betel nut sales but the marketing has continued.

Only recently, there was a NCDC police attack on betel nut sellers in Hanuabada and two villagers were shot. This has brought enormous problems to the villagers and police.

The banning of betel nut has brought deep financial problems to people who have relied on betel nut sales for all their lives and use the income for the upkeep of family. Children go to school with money from betel nut sales.

The NCDC and Government are working to improve the markets in the nation for security of produce and protection of women and girls. IN every major town there are markets being set up by the town authorities.

REVIEW

 Explain the process of bartering in early times.

 Explain the Kula trading along the north coast and Solomon Islands

 Explain the importance of gold in trading

 Explain the destruction of the Aztec civilization by Spaniards.

 Why is gold considered the most precious metal?

 How has the modern use of gold changed?

What is the role of the reserve banks of nations?

Why is Russian and Chinese currency not listed on stock exchanges?

What is the Heng Seng listing in the newspaper?

 Is the Australian currency rising or falling against the US$

 Is the PNG currency rising or falling against the Australian Dollar?

What is happening when business buys up Government bonds?

What effect will there be in decline of Chinese industry?

Why is the Japanese economy facing recession?

What is inflation?

What is hyper-inflation?

Explain the Israeli- Arab war of 1973?

Explain the formation of OPEC and OAPEC.

What is Resources Diplomacy?

Why do developing countries fail in Resources Diplomacy?

Explain the most common scam in internet or email.

What are the main problems for PNG villagers in marketing?

Which is more popular Coca Cola or Pepsi?

What are the 5 steps in marketing a product or service?

 Explain the Idi Amin scam of the army officer’s widow.

GENERAL QUESTIONS

How would we best market Air Niugini?

Explain unethical marketing.

Why do we no longer see the slogan “PNG the land of the Unexpected”?

Why does Coca Cola appear more popular than Pepsi?

Explain how supermarkets arrange produce on shelves for best selling.

Explain research needed before a new product is placed on the market.

What to focus on to market the Kokoda Trail as a tourist destination?

What research is needed on where to set up a shop?

What is a bad location for a shop?

Where would we set up a shop to market artefacts?

Does sex sell a product?

What could happen to stop customers from going to a shop?

List the steps to marketing a product or service.

How might we attract new customers?

Where are the best places to erect a poster?

Of what importance is the social media to marketing a product?

In marketing, do we have to take care with human rights?

How might team members spoil marketing of a football team?

What is sexism?

In what ways might a product be criticized for sexism?

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