SALES AND MARKETING
and Marketing is a key part of any business. A business may
make a fantastic product, or provide a first class service -
but unless they can sell that product or service they will
fail. And unless there are people or groups that want their
product they will not sell and will fail.
Where to sell?
To friends and family, and other people you meet.
(High selling price, zero selling costs).
Beside the road, or outside meeting places, such as
schools, hospital, etc. (High price, zero costs)
At local markets. (High price, low selling costs).
By opening a shop. (High price, high selling costs).
By selling to a shop keeper. (Lower price, zero
By asking a shop keeper to sell on a commission basis.
(Low price, zero selling costs).
By selling to a trader. (Low price, zero to medium
Selling costs will include a fee for a
market stall, or rent and other costs for a shop, transport to
the place of sale, and the time required for selling. If you
can sell from home, or place of manufacture, or beside the
road close to home then you may be better off. If the product
is heavy and difficult to transport then it may cost you
significantly to sell in the market, and to return with unsold
goods – but maybe you could earn more by charging for
What price to sell at?
The selling price must be something
above the minimum, and below the maximum.
The minimum, the lowest selling price,
is the total cost to produce. I stress the total
because every cost must be included: materials, fuel,
transport, buildings, land, labour, training, sales,
marketing, storage, insurance, finance or loan costs, and
time. Even the lost opportunity to involve yourself in some
other activity, such as growing crops, or a paid job, should
be considered, and the lost opportunity of investing your
money in a bank or finance institution.
The maximum selling price is the
highest that enough people are willing and able to pay.
How to fix your selling price?
Start with the cost to manufacture?
Include every cost. Let us assume it costs you 50 cents to
produce each item. Add an amount to cover all those hidden
costs that you forget about – so maybe increase the cost to $1
Then consider manufacturing and selling
time: how much time and effort is involved? How many can you
produce in an hour, a day, or a week? You have to sell enough
to earn yourself a decent wage. If the current wage for
someone like you is, say, $2 per day, if you could get a job
earning that rate, then your business has to earn that much
and more – say $3 per day. So if you only produce one item
per day you have to sell for $4 each, at least ($1 to cover
costs, $3 for your wages). But if you can produce and sell 5
per day then your selling price can be lower, at under $2 (5 x
$1 costs, plus $3 wages = $8, divided by 5 products, gives a
selling price of $1.60). Generally the more you can produce
the lower your costs will be, and so the higher potential for
profit, although there may be extra costs for transport,
workers, etc. But if you can’t get a job at any rate, then
even earning less then $1 per day running your own business
may be an improvement.
Also consider the value to your
customer: does your product save your customers time and
money? If so then people should be more willing to pay a
higher price. If a clay cooking stove uses 50% less firewood,
and if a family spends $8 per week on firewood, then they
would save $4 per week – so they should be able and willing to
pay much more than $4 for a stove, as it will save them money,
and time, and bring many other benefits. If a stove lasts for
say 2 years then even a price of $100 would be a bargain –
users would save $400 over the life of the stove ($4 x 52
weeks x 2 years), so effectively what started as a huge cost
for them will actually cost them nothing, or less than
nothing. If people don’t have $100 they cannot and will not
buy at that price – but they would be better off if they did.
But what is the highest price you could
sell for? Maybe people would be prepared to pay $20 – maybe
the richest would even pay more, say $30. If so then consider
selling for this higher price – maybe sell your best products
at $30, slightly less quality for $20, and the poorest quality
Maybe charge extra for delivery, for
those that can afford it and don’t want to or can’t carry the
If lots of people want your product,
but you can’t produce enough, then you could charge a higher
price and only sell to the richer people. Or you could employ
others, pay others to help you, maybe just with one part of
the whole task, maybe transport, or selling – anything that
saves you time and enables you to produce more.
If your price is too high and people
can’t afford to pay, could you maybe allow payments in
installments? But that will create new problems of collecting
the money, and the possibility of losses. The poor may not be
able to pay full price on the day of purchase – consider
letting them pay part of the price now and the rest later: so
long as the first payment covers all your costs you wont loose
even if they fail to make the final payment.
Be prepared to reduce your price, to
haggle and strike a bargain. If a particular item isn’t
selling, whilst others do, maybe reduce the price of that one
item – maybe it doesn’t look as good, or is damaged.
The selling price must always be
significantly above the cost price – overall. It is OK to
sell a few cheaply, even to give away to a few key people,
‘movers’ or ‘trend setters’ in the community, or to others to
test the market and product. But long term the business must
cover all its costs – else it will fail.
Be aware of your target market – who
are you trying to sell to: rich or poor, young or old, male
or female. Try to sell where those people are.
Is your product an essential item
everyone needs (this could increase the price), or something
that saves money (this increases the potential price), or is
it a luxury item just for the rich (you might get a high
price, but need access to those rich people to be able to
sell)? The rich will usually be able and willing to pay the
most, but it may cost more to produce a better product, with
more expensive packaging and marketing.
You could target a product either for a
mass market to everyone (bigger quantities, lower price, so
lower cost and quality of product) or for a discerning richer
market (fewer sales but a higher price). It depends on many
factors, including the type of product, your aims and
ambitions, the potential market around you, your access to
that market, how many you can produce, and at what cost.
Test the market and price
Maybe try selling some products,
especially the best quality you can make, at a high price,
more than you might hope for. You might be agreeably
Usually your total costs will be higher
than you think, especially at the start of a new venture, so
try selling for more than you think.
If you start asking a higher price, you
can reduce the price if necessary; then your customer will be
happy, thinking they got a bargain.
Start small, with small quantities, to
test the market and product and your ideas. Then you can
expand and grow as you learn what works – and have not lost
too much if it fails.
Advertise and Promote
The first stage of selling is
putting your goods on display, or otherwise letting people
know you have goods for sale.
A poster might help, as shown on
the right. It will inform people of the advantages of
your product, and attract them to your shop or stall.
Maybe advertise a high selling
price of say $30, with a sale price, an introductory
price, of $15. That will encourage people to buy now,
before the price goes up to its ‘full’ price.
Possibly the best way to promote
your product is word of mouth – if you believe your
product is good then tell everyone you meet how good the
product is, and encourage friends and family and existing
customers to do the same. You could even offer a
commission if customers persuade others to buy from you.
Target the key people in your
community. Get them on your side and they may help you sell
more. If selling dresses then maybe try to sell to the local
chief’s wife, or local politician etc. If selling cooking
stoves, try to sell to someone in the main street, where they
cook in full view of others passing by – so people will see
your product in use and be persuaded to buy from you. Even
consider giving a stove, or selling at half price, say to a
café where they currently cook over a fire, so long as the
cook will advertise your stove, and maybe let you put up a
Every person who buys from you is a
potential help. If they are happy with your product and tell
their friends word may spread and others come to buy from
you. Even someone seen walking home carrying your product may
create new customers.
Make sure your product is seen – even
if people desperately want your product, if they can’t see you
are selling it then they can’t buy off you!
Competition is sometimes good,
sometimes bad. If the market is very large, wanting more
products than you and others can provide, then competition is
no problem. If your competition is selling every item they
produce maybe they will agree to sell yours too – for a
commission. But if your closest market is already saturated,
with someone else meeting all the demand, then you may need to
go further afield to sell – otherwise both you and they may
get a lower price, or be unable to sell all your stock.
If you compete with someone already in
the market then you may upset them – so if you can at little
cost to yourself go elsewhere then it may be better. But
competition is fair, and ultimately good for business as it
encourages everyone to run an efficient business since the
best will survive. If you are competing with another producer
then you will have to provide your product to a better
quality, or at a lower price, or have some other good feature
that persuades people to buy from you rather than others.
If you go some else where your product
is unique and wanted then you may get a higher price and sell
Real life example from selling
We are trying to promote the
manufacture and sale of clay cooking stoves in Uganda. The
richest people in the cities will not be interested – they
will already use electric, gas, or oil stoves – they are not
our target market. Many of the poorer people, especially in
the rural areas, currently cook over open fires – they are our
target market. Amongst that target group the very poorest
will not be able to pay anything – but could still benefit
from seeing the stoves, and learning how to make them for
themselves; but many will be able to pay something, and the
richest will be able to pay the most.
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