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MARKETING


When goods are produced and are ready for use, the producers must get the people who need the goods. There is need to transport the goods to a common place where the final consumers can easily get the goods. Such a place where traders or sellers meet buyers or consumers is called a market.
Definition of marketing
Marketing can be defines in various ways.
(i) Marketing is the process of identifying and anticipating consumer demand for a product and satisfying their demand more efficiently and profitably. This means that before producers engage in production of a certain commodity, they should first find out what the consumers need so that they can produce according to the consumer’s needs.
(ii) Marketing can also be defined as a system of interrelated activities designed to plan, price, promote and distribute goods and services to groups of customers for the aim of satisfying their demand.
Conditions for marketing
  1. A way for these parties to communicate, that is, the buyer will not buy unless he knows the existence of a product and seller will not sell unless he knows the market.
  2. Desire and ability to satisfy these wants and needs.
  3. Something of value to contribute in the exchange.
Objectives of Marketing
Some of the objectives of marketing include;
  1. To increase sales volume through aggressive selling techniques.
  2. To achieve profit.
  3. To face competition.
  4. To give quality assurance to customers
TYPES OF MARKETING
There are mainly three types of marketing determined by the type of products concerned. They include;
  1. Primary marketing
  2. Secondary marketing
  3. Service marketing
  1. PRIMARY MARKETING
This is the types of marketing that deals with identification and anticipation of consumer demand for primary products (raw materials) and finding a way to satisfy this demand. All agricultural marketing boards are concerned with this type of marketing since they are concerned with this type of marketing since they are concerned with the distribution of primary products.
2. SECONDARY MARKETING
The secondary marketing is concerned with knowing the requirements of the market. It aims at satisfying the demand for manufactured goods.
3. SERVICE MARKETING
This type of marketing deals with identifying and satisfying consumer demands for services. Services include banking, Insurance, transport, warehousing, teaching and medication.
IMPORTANCE OF MARKETING TO THE CONSUMERS
  1. Marketing enables the consumers to know the sources of supply for what they demand.
  2. Marketing improves the standard of living of the people by availing the goods needed by the consumers in the market.
  3. Through marketing, consumers are able to determine the price of goods, hence there may be no exploitation.
  4. Marketing enhances the variety of choice due to wide range of goods supplied in the market. The consumer is provided with a wide range of goods where they can choose from
IMPORTANCE OF MARKETING TO THE PRODUCERS
  1. Marketing enables producers to know the demand of their consumers. The quality and quantity of the goods consumers need will also be considered.
  2. It enables producers to know their competitors as result, producers are in position to improve their goods to fit the competition market.
  3. Marketing enables the producers to fix the price at which they will sell their products.
  4. Marketing increases the sales volume.
  5. Marketing enables the producers to know the best means of communication with their consumers in order to complete a transaction.
IMPORTANCE OF MARKETING TO THE NATION
1. Through marketing a country can get surplus.
The surplus can be stored as a buffer stock to be used when calamities strike.
2. Marketing leads to the improvement in production.
Through marketing a country can devolve ways on how to improve the quality of goods.This in turn leads to improvement in export thus earning foreign exchange for the country.
3. Marketing is a source of employment
People get employed in various marketing activities and departments. This reduces unemployment rates and other risks such as crime related to unemployment.
MARKET
There are various definitions of a market these are:-
  1. It is an area or place where buyers and sellers meet to transact. This means buyers and sellers meet to exchange goods and services. A market is always designated place authorized by the government through local authorities.
  2. It is a situation in which buyers and sellers transact or exchange goods and services for example people buy goods through internet, one can purchase a car from Japan, pay by cheque and the selling company ships the car where the buyer will get it at the port.
The word marketing therefore comes from the word market. A market can means demand for the commodity for instance an increase or decrease in the demand of a commodity leads to an increase and decrease in the market of the commodity.
CONDITIONS FOR THE EXISTENCE OF A MARKET
1.Existence of goods and services
For a market to exist, there must be willing of goods such as food stuffs and stationary and services such as hair dressing to be exchanged.

2. Existence of buyers and sellers
For a market to exist there must be willing buyers and willing sellers. Sellers must be willing to supply their goods and services to the market for buyers to purchase them.

3. An area where a market is located
There must be a specific area designated for people to come with their goods and meet with the willing buyers. At times there are set days specifically when goods and services are sold in a given market.

4. Contact between sellers and buyers
The willing seller and willing buyer must be in contact in order for the exchange to take place. Communication may be physical or may be through telephone.

5.Price of commodities
In a given market, there is always a prevailing market price as a result of interaction of the forces of demand and supply for example during the season when mangoes are in high supply their cost is always low, may be at Tshs. 50. However, when they are out of season, you can buy a mango at Tshs. 300 each.
FUNCTION OF A MARKET
The main functions of a market are:-
1. Source of supply
A market is a source of supply of goods and raw materials to both consumers and manufacturers. This is made possible due to the fact that it is a designated place where people supply goods anticipating for potential buyers to purchase them.
2. Facilitation of transaction
A market facilitates the process of buying and selling of goods and services. This is done by availing a situation where buyers and sellers can meet or contact to exchange goods and services.
3. Contact between buyers and sellers
A market provides a ground for buyers and sellers to have contact with one another during the process of exchanging goods and services.
4. Price stability
Price of goods and services are determined in the market by forces of demand and supply. These forces help in stabilizing the price of goods and services.
5. Increase in production
Due to existence of a market, the demand of a commodity in a market makes the suppliers supply more goods. This in turn increases the production of the given commodities.
CLASSIFICATION OF MARKETS
Markets are classified according to the type of goods and services offered in that given market. These are two main ways of classifying markets
(i) Market types
(ii) Market structure
MARKET TYPES
In this classifications, market classification is done with reference to the type of goods and services bought and sold in the market.
Examples include:-
  1. Commodity market
  2. Factor market (input)
  3. Financial market
1. COMMODITY MARKET
In this type of market there is buying and selling of final goods and services. Goods that are ready for consumption, for example clothes and food stuffs are sold here.
2. INPUT MARKET
This type of market involves selling goods which are used in the production of other goods like machines and raw materials. Example of input market are
(a) Labour market
This is a type of market which involves buying and selling of labour at a given wage rate.
(b) Capital market
This type of market involves the buying and selling of capital goods like machines.
(c) Land market
This type of market involves buying and selling of land at a given price or a given level of rent.
3. FINANCIAL MARKET
  1. Manufacturers and producers do not easily change the price of branded goods as opposed to the price of non branded goods.
C. Advantages to the wholesalers and retailers
(i) It helps in standardization of quality, thus it serves the wholesalers and retailers in choosing and buying stocks.
(ii) It help in displaying programmes in retail stores.
(iii) It helps to reduce price comparison and also in stabilizing prices.
(iv) Less risk is involved in the case of branded goods as they have a steady demand in the market.
Disadvantages of Branding
(i) It creates a venue for production of fake goods especially for the products whose brand is popular.
(ii) It creates monopoly of the product since manufacturers who cannot brand their goods leave the market.
(iii) Branded goods tend to be highly priced due to working and advertising costs.
PACKAGING AND PACKING
Packaging:
Is an activity which involves designing a producer’s container or wrapper in which goods are packed. It can be paper, bottle or box.
Packing
Is the whole process of putting or arranging goods manufactured by a firm in a package.
FACTORS TO CONSIDER WHEN DESIGN A PACKAGE
  1. Size and weight of goods
The size and weight of goods must be considered since large and heavy goods require a strong package.
  1. Shape
The shape of the package must be elegant to the consumer’s view and easy to be handle in a store room.
  1. Nature of the goods to be packed
A product may be perishable or durable, liquid or solid, therefore a package should be designed according to the product to be packed.
  1. Promotional policies and strategies. An attractive package has an impact to consumers in buying decision.
  2. Cost
The cost of the materials required to make a package should not be expensive since this will raise the cost of the goods.
REASONS FOR PACKAGING AND PACKING
  1. To protect goods from damage.
  2. To facilitate branding and labeling.
  3. To make the handling of goods convenient.
  4. To make the product look attractive.
  5. To protect the quality of goods against atmospheric conditions such as bad weather condition.
  6. To prevent loss by evaporation in the case of products like petroleum and gas.
ADVANTAGE OF PACKAGING AND PACKING
  1. A package can be used for other purposes when the product in it has been consumed. Plastic bottles for instance are used for storage of water.
  2. Packaging and packing facilitates branding and advertising. Most of the branded goods are packed and making easy to advertise them.
  3. Package ensures hygiene for food products stored with other goods.
  4. Packed goods are convenient to handle
  5. Goods are protected from damage when being transported from the area of production to the area of consumption.
DISADVANTAGE OF PACKAGING AND PACKING
  1. It increases the cost of production to the manufacturers.
  2. Packed goods are more expensive than unpacked goods as the cost of packaging and packing is usually passed on to the consumers in terms of increased price.
  3. Consumers are denied the right of inspecting the quality and quantity of packed goods.
  4. In the process of opening or unwrapping consumers may not open the package properly thereby damaging a product thus a loss to a consumer.
STANDARDIZING AND GRADING
Standardization means establishing a standard based on physical properties or quality of any product. It is the whole process of setting specification or standard to which all products made must conform to size, colour, appearance and chemical contents.
Grading is the sorting of products into classes made up of units possessing similar characteristics of size, quality, colour, shape and any other specification. Grading may be fixed or varying variable.
TYPES OF GRADING
(i) FIXED GRADING
This refers to the process whereby the same standards are used year after year. Wheat and cotton are graded in this manner.
(ii) VARIABLE GRADING
This refers to the process whereby specifications are required to be changed in accordance with the quality of goods produced from year to year. Fruits and vegetables are graded in this way.
ADVANTAGES OF GRADING
  1. Reduces the cost of advertising and marketing.
The cost of advertising graded goods is low since the goods are well known to the customers.
  1. Wider market
Graded goods can easily be sold to distant parts of the market as buyers can order the goods by grade.
  1. Selection by customers
Grading shows the consumers from spending a longer time in selecting the goods. Moreover since prices are fixed, consumers spend little time in negotiating prices.
  1. Helps in future grading
Grading helps in transaction where delivery is to be done in future as buyers are assured of the quality of goods received.
  1. Simple and cheaper financing
A seller are graded goods can easily obtain loan from financial institutions as the value of goods can easily be assessed.
PRICING
Goods cannot be marketed until the cost of the given products is known. Pricing can be defined as the process of setting a price for a specific commodity being offered for sale in a market. Price is the amount of money or other consideration exchanged for the purchase or use of the product, ideas or service. Price also can be defined as the amount of money that a customer has to pay for a product.
PROMOTION
Is the marketing communication process utilizing personal means to remind, inform and persuade buyers to buy the organization’s products being offered for sale in a given market. It is made possible by the promotional mix which includes advertising, sales promotion, personal selling and publicity.
PLACE (distribution)
After goods have been manufactured, they have to be taken to a place closer to the customers.
Distribution refers to the movement of goods and services from suppliers to the customers with the aim of satisfying consumer’s needs. It involves a channel of distribution and physical distribution.
PRODUCT DEVELOPMENT
Product development refers to the creation of products with new or different characteristics that offer new or additional benefits to the customer.
Product development may involve modification of an existing product or its presentation or formulation of an entirely new product that satisfies a newly defined customer want or market niche.
Note:
The above are the marketing mix also known as 4Ps of market that means price, promotion, place and product.
MARKET RESEARCH
Is an investigative activity which is carried out to establish the consumers demand for a product.
OR
Is a systematic way of collecting and analyzing information related to market activities particularly advertising, product and sales marketing research.
Market research is undertaken before production is launched.
AIMS OF MARKETING RESEARCH
  1. To find out if there is a market for the goods to be produced.
  2. To establish the suitable method and channel of distribution for the product.
  3. To determine the most attractive form of presenting the product to the consumers (packaging ).
  4. To assist one in knowing the most suitable effective, cheap and convenient method of promoting the product.
  5. If done before production, it will determine the best price of the product for the advantage of the consumer.
METHOD OF CARRYING OUT MARKET RESEARCH
  1. Field investigations
This consists of either person interview or by use of questionnaire. A questionnaire is a list of questions to be answered by a group of people for the purpose of getting information. It is not reliable unless the facts given are supported by evidence from other sources.
  1. Statistical data collection
The entails obtaining information from statical data compiled by the government analysis and research, trade organizations and the chambers of commerce.
  1. Testing the market
If a product is new in the market, a small amount of the product is produced and supplied to a limited geographical area to test the response of customers. If the response is good, the product is produced and served to a wider area.
  1. Feedback from distributors
Distributors are always in a good position to receive the customers say about product. This may be in the form of complaints or recommendations. This information helps the products to take the appropriate action.
STEPS IN MARKETING RESEARCH
  1. Definition of the problem
The researcher must make clear his or her objectives and the problem that he or she is researching on before setting out for investigations.
  1. Source of secondary data
These include data obtained from the documents within and outside the company. These are internal and external sources. Internal documents includes the company records while external documents are obtained from libraries and other institutions.
  1. Source of Primary data
Primary data comprises of the first information collected by the researcher directly from the field. There are three major ways of collecting primary data these are:-
(i) Observation method
Here the researcher observes various aspects of the targeted market by visiting the place such as market centre
s, depots and shops depending on the objectives.
(ii) Survey method
Here researcher may use face to face interviews, design, questionnaires, take photographs, tape or record information according to his or her research objectives.
(iii) Experiment method
This involves test marketing in selected areas. The research introduces free samples to the actual areas.
(iv) Compiling and analyzing data
At this stage the researcher summarizes the data, compiles a report, makes the conclusion and hands the report to the management for action.
ADVANTAGES OF MARKETING RESEARCH
  1. Market research enables producers to find new markets for their products.
  2. Market research contributes a lot in reduction of prices due to cheaper but appealing method of packing.
  3. Market research helps to improve the quality of the products.
  4. Active market research eliminates wasteful advertising campaigns and improves on the useful ones.
DISADVANTAGES OF MARKET RESEARCH
  1. Some researchers may not show the expected results if the research methods used were inappropriate.
  2. Market research is expensive to undertake.
  3. Information collected from interviews and questionnaires depends on the moods, honesty and reliability of the respondent.
  4. A selected population sample may be too small to adequately represent the entire population. This may result to get biased information.

MONEY AND BANKING


Money is anything or any commodities chosen by common community to be used as the measure of value and medium of exchange.
OR
Money is anything acceptable as a medium of exchange
Money is not wanted for itself but for what it can be exchanged for. In modern world exchange must takes place and this may not be possible without money.
EVOLUTION OF MONEY
Before money was introduced trade was by the means of barter trade. This is a exchange goods for goods.
However due the problems which come up with barter trade it was inevitable monetary trade was introduced.
Generally evolution of money was in five stages;
  • Barter trade
  • Commodity money
  • Cowries
  • Precious metal
  • Coins and Notes
PROBLEMS OF BARTER TRADE
  1. Lack of Double coincidence of wants
During barter trade it was so much difficult to get two people of the same wants. e.g Let’s say one wants maize and another wants beans thus these two people could find difficult to get other people of the same wants.
  1. Lack of measure of value.
It was very difficult to decide how much quantity of one commodity to be exchange for another commodity for example it was very difficult to decide ho much quantity of maize must be exchanged with unit of a cow.
3. Lack of store of value
Under batter system it was difficult to store perishable goods such as vegetables and exchange for another commodity in future.
4. Indivisibility of commodities
It was not possible to divide commodities in small part for example if person wanted cloth equal to half value of sheep could not divide sheep into two parts.
  1. Difficult of transporting some commodities
Due to lack of modern means of transpotation and immobility of some items from one place to another for exchange.
ADVANTAGES OF BARTER TRADE
  1. Barter trade may not involves many documents
  2. It removes the problems of currency differences
  3. One can easily know the extact quality of others goods he is like to get from their goods exchanged.
  4. Barter trade promotes social understanding among the part involved
  5. Barter trade eliminates the risk involved in carrying money
  6. The system is quite simple and fast avoiding unnecessary delay
  7. Even illiterates can carry out exchange since no documentation required
  8. Cheating is not possible because both parties physically see and involved in the exchange.
FUNCTIONS OF MONEY
  1. Medium of exchange:
This was solved the problems of barter trade of double coincidence of wants. A goods or services can be exchanged with money even if double coincidence is not there.
2. Unit of Account:
With the introduction of money every goods has own value today, unlike in the past when it was very difficult to determine the value of goods or services.
3. Store of Value:
Under normal situations money can be stored and anytime it is withdrawn by the owner. It can exchanged goods or services.
4. Standard for future payments: Obligation to be made in the future can be entered now by using money.
FEATURES OR QUALITIES OF GOOD MONEY
Good money should be posses the following characteristics
  • Should be generally acceptable
  • Should be easily and tight to carry
  • Money should be durables
  • Should be homogeneous
  • Should not be easy to forge or counterfeit
  • Good money should be scarce
  • Should be stable in value
  • Should have standard units (divisible)
  • Should be cheap and convenient to print
  • Should be easy to recognize whether it is real money or forged
LEGAL TENDER
This is any means of payment that people are compelled by saw to accept in settlement of any obligation. Therefore all bank notes and coins are legal tender in their respective countries of issue.
CURRENCY
The currency of a country is that money which is nationally acceptable in exchange of goods and services. Countries with strong economies have their currencies convertible. In other wise they are conveniently and freely accepted in other countries. Examples, The US dollar and pound sterling the most convertible currencies in the world.
MONEY AND CAPITAL
Money and Capital are two different terms through used interchangeably. Money is anything generally acceptable as a means of exchange but Capital is anything invested with an aim of further production. In this case money may act as capital but not all capital is money.
FORMS OF MONEY
1. Commodity money: At one stage certain goods acted as money because many people were within to exchange them for other goods.
-These included cattle, bark-cloth, goods and cowries shells, even today in many Africa societies, girls (women) are being given away in exchange to cows.
2. Coins: This is any metallic money. It may be in cents or shillings. Coins may be standard or token
(a)Standard coins: These are ones where the face value is equal to the value of metal from which it is made.
(b) Token coins: These have the face value greater or less than real value of the metal from which it made.
3. Bank Notes: This is money inform of paper issued by the central Bank well known us paper money. Paper money may also be token money. Originally paper money was as good as gold, because it was fully backed by Gold. Later countries abandoned the Gold standard and started printing money which was not fully backed by gold.
4. Bank Deposit: This is the money which is deposited by their accounts in banks, bank deposits can be well protected under saving, current and fixed deposits accounts. In Tanzania all peoples deposits are insured by the central bank at a time of 3,000,000/= (three million shillings)
5. FLOUCIARY ISSUE: This is not backed up by gold reserves but only by government securities.
6. CHEQUE: A cheque is a written order by a bank customer to his bank to pay a specified sum of money to a named person. A cheque is money but not a tender, so one may reject it in settlement of bills.
DEMAND FOR MONEY
People hold money for several reasons. Money may be held for any of the following motives
TRANSACTION MOTIVE: This is when money is held to enable a person to buy and maintain daily expenditures. E.g. to buy food, watch a film, attend football match and many other.
PRE-CAUTIONARY MOTIVE: People may keep money to cater for future unforeseen occurrences. These unexpected expenditures may include sickness, accident, death, of relatives or any other.
SPECULATION MOTIVE: People may hold money after anticipating future tenders in the economy E.g. Fall or rise in prices. They spend when prices are low and serve when prices rise.
BANK
Is the institution which are involved in financial transaction such as mobilizing of saving, provision of credits, accepting deposit and provide advice to the customer.
EVOLUTION OF BANKING IN TANZANIA
During the colonial days (before independence)
Banking in Tanzania was controlled by the East Africa Currency Board, All the East Africa countries E.g. Uganda, Kenya and Tanzania were using the same currency the East Africa sterling, after independence each country established its own central bank hence in 1968; Bank of Uganda was set up.
BANKING SERVICES
Bank loan: This is money sent by a bank to its customer on presenting collaterals security. A security is any item a bank can sell off for a certain value should a borrower fail to pay back the loan. A fixed rate of interest is paid on a bank loan.
CONDITIONS CONSIDERED BEFORE GIVING A LOAN
  • Credit worthiness of a person
  • Objective for the loan
  • Period for which the loan is to be used
  • Whether a borrower is a bank customer or not
  • The economic integrity of the applicant
  • The value of the security presented
  • The amount of money required by the borrower
  • The government policy on lending
Bank loans are divided into:-
  • SHORT-TERM LOAN
  • MEDIUM-TERM LOAN
  • LONG-TERM LOAN
Types of loans
Duration of loan
Possible
SHORT-TERM
Up to one year

Finance cash flow shortfalls; buy assets with a life of less than 1year. Accommodate seasonal fluctuation
MEDIUM-TERM
1-10 Years
Finance small scale expansion purchases assets with a life of 1-10 year
-Overcome a cash flow deficit
LONG-TERM
Over 10 years
Buy assets of more than 10 years life
Finance start up
BANK OVERDRAFT: This is money sent by a bank to its prominent customer exceeding the amount on his account. In other words the customer has overdrawn his current account up to a certain figure. Interest is paid on the amount overdrawn.
BANK DRAFT (BANKER’S DRAFT): This is a cheque by which a bank pays money to a named person. This is the safety means of paying money to a person because a bank guarantees payment on it. In other words, a bank draft is a cheque drawn on a bank itself and the bank will issue it only if a person requesting it has paid money to the bank. A bank draft may also be drawn by one bank to another to pay a specified amount to a named person.
STANDING ORDERS (S.O): This is a system where a customer of a bank with a current account authorizes bank to pay a given amount of money to a named person or company of regular intervals on a given day of the month.
DIRECT DEBIT (D.D): This differs from a standing order in that the payee request the bank to dedicate fixed or specified sums from the holder’s account. Otherwise both request transferring money from one account to another or to a named person.
CREDIT TRANSFER SYSTEM (C.T.S): This is when a bank customer authorizes his bank to pay money in to the account of a named company or individual payments are made directly into the bank account of the named person.
DIFFERENCES AND SIMILARITIES BETWEEN STANDING ORDER AND CREDIT TRANSFER.
i. Credit transfer are made by putting the money on ones account but standing orders are made directly to the payees
ii. With credit transfer system the payee must have an account but this is not necessary with standing orders
iii. With both systems, payments are made regularly
iv. Both systems are affected through bank.
TRAVELLERS CHEQUE (T.C):
These are cheque issued by the commercial bank to people who travel to distant places. A person pays for them in advance and is useful because they are both in local and foreign currency. When applying for these cheques a person pays a small service charge then the bank issues the cheque leaves and the person signs them in presence of a bank officer.
IMPORTANCE OF TRAVELLERS CHEQUE
  • Some shops and hotels may be willing to accept person cheques
  • They are available in various currencies
  • They are safer to carry than cash.
  • They are easy to carry compared to hard cash.
  • Travelers cheques may be given in different denominations
CHEQUE
A cheque is a written order from an account holder to his bank to pay a specific amount of money to the named person. A cheque may be OPEN or CLOSED.
OPEN CHEQUES
These are payable across the bank counter payable to the holder or to the named person. An open cheque where no payee is named is called a BEARER CHEQUE. The area where a payee is named is called an ORDER CHEQUE
BEARER CHEQUE
EcoleBooks | COMMERCE O LEVEL(FORM THREE) NOTES - MARKETING
ORDER CHEQUE
EcoleBooks | COMMERCE O LEVEL(FORM THREE) NOTES - MARKETING
CROSSED CHEQUE
A crossed cheque bears two parallel lines called CROSSING NORMALLY ON THE LEFT HAND TOP CORNER OF THE CHEQUE: A crossed cheque cannot be presented for payment across a counter, it must be deposited in a bank account crossing a cheque is the safety way of transferring money because even if falls in hand of an imposter, he cannot be presented for a payment across a counter, it must be deposited in a bank account. Crossing a cheque is the safety way of transferring money because even if it falls in hands of an imposter, he cannot present it for cash.
Types of Crossed Cheque:
  1. GENERAL CROSSING CHEQUE
  2. SPECIAL CROSSING CHEQUE
GENERAL CROSSING CHEQUE
This is where a cheque bears two parallel line on it’s face.
  1. The words “and company” or any abbreviation between two parallel lines
  2. Two parallel lines with or without words “not negotiable”. This indicates that should a person receive a cheque from another, he has the same right as the one who gave it to him and should have a right as the one who gave it to him in case it is lost no one else can get money on it.
  3. Two parallel lines with words “Account payee only” between them. Here money must be paid in the account of the named person and not across the counter or to someone else.
Special crossing
With special crossing in addition to what is in the general crossing the name of the bank branch is include sometimes also the amount and the name of the payee are included
Crossing cheque is the safety method of remitting
TYPES OF CHEQUES
  1. Stale cheques: This is a cheque which has stayed for over six months from the day it was written. This cheque cannot be honored by the bank.
  2. Post dated cheques: This is the one presented to the bank before the date on it. This cannot also be honored by the bank.
  3. Stopped cheques: The drawer instructs the bank not to pay E.g. if it is stolen or lost
  4. Blank cheques: This is a cheque which has been completed accept for the amount in words and figures. Blank cheques are risky in that one may fill in any figure and gets money from ones account, unless they are crossed.
  5. Forged cheques: This is used by an importer or thief to get money from another person’s account. It is advisable that the account holders keep his cheque book safely so that no one else can use it
  6. Lost cheque: One may lose a cheque as he goes to the bank to cash or deposit it in this cases he should report the matter to his bank immediately before one draw it however crossing cheque make it safe, even if one who loose it the founder cannot get money on it.
POSSIBILITY OF PAYING MANY PEOPLE: For organization which needs to pay several people using a bank current account is the best. Several people can be paid using only one cheque with a list showing how much to pay to each person named. A credit transfer system or a standing order may call for this method of paying. It may not be possible to pay several people using a savings account or a fixed deposit account.
RUN ON THE BANK
This is a situation when many bank customers wish to withdraw their money from their accounts. This may be due to loss of confidence of customers in that particular bank or due to great demand for money at a particular period for instance when parents need money for school fees, or at big days like Christmas, Idd day and others. Also should people suspend the closure of a particular bank by the central they may rush to withdraw their money from that bank.
PROBLEMS FACING BANKING
  1. LOSS OF CONFIDENCE: Many people have lost confidence in banking due to continuing closing.
  2. LACK OF INFORMATION: Many people especially in rural areas are ignorant of the importance of banking.
  3. POVERTY: The majority of Tanzania is peasant and poor who may not have any surplus money for saving after spending on basic needs.
  4. LACK OF COMMITMENT: Lack of committed qualified staff has led to closing of many banks in the country.
  5. MORAL DECAY: Moral decay among the bank staff has forced some to collaborate with the public to forge and withdraw money and this has led to heavy losses to these banks.
  6. RELUCTANCY TO PAY BACK LOANS: Many borrowers from banks are untrustworthy and do not pay their loans making the banks to sell on their securities (property) This makes people lose confidence in the bank.
  7. POLITICAL INSTABILITY: Political instability has discouraged investors towards banking business, especially in those areas experiencing political instabilities e.g Wars
  8. INFLATION: Inflation in the country has discouraged many people from saving.
  9. HIGH INTEREST RATES: Businessmen are sometimes discouraged to take bank loans due to the high interest rates yet lending is the source of income to commercial banks.
  10. LACK OF MODERN EQUIPMENT: Some banks lack modern equipment of count and enter the figures which contribute to congestion in these banks.
  11. FORGERY: Modern technology in the country has encouraged some people to forge money which may lead to heavy losses to the unfortunate banks, which may receive such money as deposits.
  12. CONCENTRATE IN URBAN CENTER: Bank concentrate in urban areas neglecting rural areas, hence limiting the scope of banking.
MEANS OF PAYMENTS;
  1. Currency notes
  2. Coins
  3. Cheque
REGISTERED POST
This is sending cash, cheque, draft or other documents by specified envelopes provided by the post office or by any envelope which should be crossed vertically or horizontally
A fee is charged for registration and compensation is offered of the letter is lost in the post.
Registered letter are not delivered through the post box instead a note (on agree card) is put in the addresses / Receivers post box which we must produce a long with a proof of identity when clearing the envelope to wrong hands.
POST ORDERS
This is special documents sold by the post office in fixed denomination of e.g. sh. 10, 20, 50, and 100. A person wishing to pay a sum of money from any post office. A sender sends a post order by using registered envelope in order to avoid mishandling. A post order can be crossed like a cheque and then deposited into a bank. The fee for post order is known as POUNDAGE.
MONEY ORDER
This is sending money by filling in an application from which must be handled over to the post office with the amount to be sent, plus a small fee. A post office gives a sender a receipt which it is sent to a receiver who will present to the paying post office.
PROMISSORY NOTES
This is a document when one person promises to pay another person or his order a special sum of money at a certain date.
BILLS OF EXCHANGE
A bill of exchange is an unconditional order in writing addressed by one person to another, signed by the person to it addressed to pay on demand or certain period or to the order of that person or to bearer.
Is a written document signed by a drawer who sold goods on credit to a drawer who bought goods on credit from the drawer?
HONOURING A BILL: If the drawer pays the amount being shown on the bill.
DISHONDOURING OF A BILL: If a person fail to pay the amount being shown on it.
ENDORSING A BILL OF EXCHANGE
The main aim of a bill of exchange is to acknowledge a debt by exchange accepting a bill a drawer does not actually settle a debt be merely agree to pay at a future date.
A drawer on receipt of the acceptance has two options which are:
  1. He can keep it with the maturity date when he can present it to the drawer in order to get money.
  2. He can transfer the right to receive money to someone else the act is called endorsement which means singing back of that bill so that money should be paid to someone else.
DISCOUNCOUNTING A BILL OF EXCHANGE
Discounting a bill of exchange means selling the bill to the bank in order to receive money, A drawer may endorse the bill to a money lending institution (bank) which would pay him the money (the value of the bill) less interest(Discounting charges) for the value unexpired period.
NEGOTIABLE INSTRUMENTS
The following documents are negotiable instruments:
  • Bills of exchange
  • Cheque
  • Promising notes
  • Travelers cheque
  • Bank draft




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EcoleBooks | COMMERCE O LEVEL(FORM THREE) NOTES - MARKETING

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