ABM - Specialized Subject
3rd Quarter
Principles of Marketing
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Department of Education Republic of the Philippines
Principles of Marketing
Alternative Delivery Mode
Quarter 1- Module 1: Marketing Principles and Strategies
First Edition, 2020
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Principles of Marketing
Quarter 1 - Module 1
Marketing Principles, Goals and
Approaches
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Introductory Message
TABLE OF CONTENT
What I Need To Know
This course deals with the principles and practices in marketing goods and services. It
also focuses on the development of integrated marketing programs that will help grow
businesses.
Learning Competency:
 Define and understand marketing Principles , Goals and Approaches
ABM_PM11-la-b-1
What I Know
Activity 1: Pre-Test for this Chapter
Directions: From the pool words inside the box, choose the appropriate term for each
description below.
Satisfaction
Consumer goods
Brand equity
Market share
Branding
Marketing
Durable
Current demand
Undifferentiated goods
Primary demand
Consumable
___________ 1. It is a form of communicating or promoting the value of a product, service,
or brand to the consumers.
___________ 2. These are goods that are purchased for personal consumption and/or for
the household use.
___________ 3. These are products whose physical characteristics are so identical, that
it would be difficult, if not impossible, to distinguish one purchased
from one vendor or another.
___________ 4. This is the availability of manufacturers to successfully distinguish their
products from other competitors.
___________ 5. This is the appreciation in a brand’s value from the point of view of
customers.
___________ 6. It is a product whose benefit can only be used by a consumer for a short
period of time, sometimes only a few minutes.
___________ 7. These are products that are manufactured to last a long time.
___________ 8. It refers to the total demand for all brands of a particular product or
service.
___________ 9. The number of people of a particular market at present that would
actually purchase the product or service offered.
___________10. This refers to measure of how well customer expectations from a
purchased product or service have been met.
Lesson 1.1
Marketing Defined and understand the goals of marketing and marketing Process
What I Need To Know
Marketing is a form of communicating or promoting the value of a product, service, or
brand to the consumers. Prior to the marketing of specific products and/or services, a
marketing company conducts a through analysis of the external environment, the market, its
competitors and customers, and an incisive audit of its internal characteristics.
General Objectives:
After going through, you are expected to:
 Undertstand the concept goals of marketing;
 Explain the marketing process
 Enumerate the classification of products/share
What’s New
Activity 2: KWL Chart
Direction: using the KWL chart, Write what you know about marketing. Write in the What I
Know column. Write the things that they want to know in the What I Want To know column in
the form of questions. Once done, Please fill the column What I Learned of the things that
have added to your knowledge in marketing using the picture below. Please Answer it shortly.
K-W-L CHART
What I Know
What I Want to Know
What I Learned
What Is It
Marketing Defined
Marketing is a form of communicating or promoting the value of a product, service, or
brand to the consumers. The “by word of mouth” marketing may be the simplest, oldest, and
most natural way of marketing a service or a product for profit and non profit purposes.
Marketing for profit aims to increase sales of products or services while marketing for nonprofit
purposes. Marketing for profit aims to communicate messages for social purposes, such a
health and public safety information disseminated by the government.
The American Association (AMA) defines marketing as “the activity, set of instructions,
and process for creating, communicating, delivering, and exchanging offering that have
creation, communication, and the delivery of value to customers.
The key to this definition of marketing is the word “value.” Thus, marketing can be
summarized as the creation, communication, and the delivery of value to customers.
Alternately, the Philippines Marketing Association (PMA) defines marketing as a “science
and profession guided principally by the universal principles of ethics, corporate citizenship,
and corporate social responsibility.
This definition emphasizes an adherence to ethical principles, corporate citizenship,
harmful to one’s health and well-being or promote violence and immortality. Products or
services that serve no purpose or contribute nothing to individual and societal well-being
should not be marketed.
GOALS OF MARKETING
The goals of marketing can be summarized as follows:
1. Understand the market and its consumers, ans satisfy their changing needs and wants.
2. Introduce and innovate products and services that improve human condition and the
quality of
life.
3. Design and implement effective customer-driven marketing strategies.
4. Develop marketing programs that deliver superior value to consumers.
5. Build and maintain mutually beneficial and profitable customer relationships.
6. Capture customer value to create profits.
7. Promote value transactions with full regard to the well-being of societies.
The Marketing Process
The marketing process can be illustrated in the following diagram: Figure 1: The
Marketing Process
Before marketing products and/or services, the organization must have a thorough
analysis of the external environment, the market, its competitors and customers and an
incisive (perceptive) audit of its internal operating characteristics. This is followed by the
formulation of relevant marketing strategies coupled with a calibrated response using the
elements of marketing (commonly known as the 4P’s). As soon as the marketing strategy is
implemented, regular monitoring takes place in order to identify deviation and, if necessary,
make adjustments to any or all elements of the marketing mix.
Products, Services, and Experiences
What do organizations market? As consumers, we are most familiar with the marketing of
goods and services. Order than these, however, marketing organizations also market
experiences, ideas, advocacies, and even personalities.
The Three Product Level
Consumers often think that a product is simply the physical item that he or she buys. In
order to actively explore the nature of a product further, let’s consider it as three different
products – the CORE product, the ACTUAL product, and finally the AUGMENTED product.
This concept is known as the Three Levels of a Product. Figure 2: Product Levels
The CORE product is NOT the tangible physical product. You can’t touch it. That’s
because the core product is the BENEFIT of the product that makes it valuable to you. So with
the car example, the benefit is convenience i.e. the ease at which you can go where you like,
when you want to. Another core benefit is speed since you can travel around relatively quickly.
The ACTUAL product is the tangible, physical product. You can get some use out of it. Again
with the car, it is the vehicle that you test drive, buy and then collect. You can touch it. The
actual product is what the average person would think of under the generic banner of product.
The AUGMENTED product is the non-physical part of the product. It usually consists of
lots of added value, for which you may or may not pay a premium. So when you buy a car, part
of the augmented product would be the warranty, the customer service support offered by the
car’s manufacturer and any after-sales service. The augmented product is an important way to
tailor the core or actual product to the needs of an individual customer. The features of
augmented products can be converted in to benefits for individuals.
Features and benefits of products
Features and benefits of a product are also relevant to the three levels of the product.
Products tend to have a whole series of features but only a small number of benefits to the
actual consumer.
Let’s look at this another way, if you buy a Nintendo console it has many features; for
example you can play games alone or you can play against another opponent or two or three
opponents. You can also have access to the Internet. Avatars are adaptable so you can create
yourself and your friends. These are all examples of features to the consumer. However a
consumer may buy it because he or she wants to stay fit and will use software and peripherals
to become healthier. Becoming healthier is the benefit to the consumer.
The consistent marketer will aim to discover the consumer’s preference for benefits and
will match individual features to the preference. That is why professional salespeople for
example, often ask many questions whereas a novice salesperson will just tell you the features
of the product
Classifications of Products/Goods
Products that are marked can be generally classified according to use, differentiation,
types, and durability. Figure 3. Classification of Products/Goods
According to Use:
Consumer goods
Industrial goods
According to Differentiation:
Undifferentiated goods
Differentiated goods
Products/Goods
According to Durability:
Consumables
Semi-Durables
Durables
According to Types:
Convenience goods
Shopping goods
Specially goods
Unsought goods
According to Use: Consumer and Industrial Goods
When classified according to use, products/goods can either be consumer goods or
industrial goods.
Consumer goods are goods that are purchased for personal consumption and/or for
household use. Examples of these are instant noodles, biscuits, milk, detergent soap,
shampoo, and other similar items.
On the other hand, industrial goods are purchased in order to make other goods, to
serve as a raw material or input in the production of other goods. Typical examples are
aluminum (used to manufacture kitchen equipment and cans) and electronic cables and wires
(serve as electrical conduits for home appliances) among others.
It would not be possible to say, however, that a product is always a consumer good or an
industrial good. A good that is ordinarily a consumer good can also be used as an industrial
good, and vice-versa. For example, when a consumer buys sugar from the supermarket and
uses this sugar to sweeten his/her coffee, the sugar in this particular case is a consumer good.
However, if the sugar is added to flour, chocolate syrup, eggs, and walnuts to make brownies
and eventually sold, the sugar in this case is an industrial good.
In other words, physical characteristics alone cannot determine whether a product is a
consumer good or an industrial good. One should also consider how the product is ultimately
used.
According to Differentiation: Undifferentiated and Differentiated Goods
Undifferentiated goods are products whose physical characteristics are so identical,
that it would be difficult, it not impossible, to distinguished one purchased from one vendor or
another. Most undifferentiated goods are products that sourced from nature.
A typical example of an undifferentiated good is rock salt. When a housewife goes to the
wet market to purchase rock salt from two different vendors, determining which one came from
one vendor or the other is a challenge. Salt bought from the two different vendors looks, feels,
and tastes identical.
On the other hand, differentiated goods are varied in their characteristics and features
that make them distinguishable from one another. If there are white-colored vehicles of each
model from all local car manufacturers parked side by side, the Toyota Fortuner would still be
readily distinguishable from the Mazda 3, the Nissan Sentra, the Honda Civic, and from the
other vehicles in the parking area. This is because each manufacturer and car model has
varying appearances and features. The appearance of the Toyota Fortuner is different from
mitsubishi’s Montero Sport. They have different grill designs, headlights, body heights, hoods,
ground clearance etc. The ability of manufacturers to successfully distinguish their products
from other competitors is called branding.
Branding provides a product or service a unique distinguishing name, logo, symbol, or
image which is used to differentiate it from other similar products and services.
Why do some manufacturers brand their products, while others do not? The major reason
is cost. When a company decides to brand its products, it must recognize that there are two
responsibilities that accompany branding:
 All products carrying the brand must have quality consistency
 The brand must be advertised and promoted
The underlying reason why manufacturers decide to engage in branding despite the cost
is that they want the brand to be known and to be preferred by customers, eventually creating
and building brand loyalty. No customer will patronize a brand whose quality is inconsistent.
For a brand to be known, it must be extensively advertised and promoted.
Once a brand acquires customer recognition, a positive market reputation and goodwill,
higher selling prices can be charged, larger sales revenues are generated, and higher profit
margins are realized. This is because customers begin to attach value to the brand than to the
product itself. This appreciation in a brand’s value from the point of view of customers is called
brand equity.

Branding
Product
provides
a
product
or
service a unique
distinguishing
name,
logo,
symbol,
or
image which is
used
to
differentiate it
from
other
similar products
and services
According to Durability: Consumable, Semi-Durable, and Durable Goods
Based on Durability, Products are either consumables, semi-durables, or durables.
Durability refers to the length of time a consumer can derive benefit from the product or good
purchased.
A consumable is a product whose benefit can only be used by a consumer for a
consumer for a short period of time, sometimes only a few minutes. For this reason, many
mis-interpret consumables to exclusively include food, drinks, and edible items. Although
these are consumables, non-edible items such as detergents and toiletris are also considered
consumables. The benefit one can derive from soap, for example(for cleaning oneself) may
only last few days.
On the other hand, semi-durables provide benefits to the consumer for a longer period of
time, usually spanning several months. Semi-durables are manufactured for longer-term use
by consumers. Examples of semi-durables are clothes, shoes, belts, jackets, etc.
Durables are products that are manufactured to last a long time. They are capable of
providing consumers with years of beneficial use. Durables are casually expensive, and many,
therefore, require an augmented product to market them effectively. Examples of durable
goods are automobiles, houses home appliances, customer electronics, furniture, sports
equipment, and toys.
According to Type: Convenience, Shopping, Specialty, and Unsought Goods
Convenience goods are products that are purchased frequently, are usually inexpensive,
and do not require much purchase effort and evaluation. Examples are newspapers, gum, and
candy.
The key to the successful marketing of convenience goods is its availability in as many
retail outlets as possible, catering to consumer need where and when it arises.
Shopping goods, on the other hand, are purchased less frequently than convenience
goods, are relatively more expensive, and require some amount of information search and
evaluation prior to purchase. Consumers of shopping goods consider features, evaluate
attributes, and compare prices. Examples of shopping goods are shoes, clothes, and
handbags. The successful marketing of shopping goods depends on intensive advertising,
well-trained salespersons, and positioning company products as superior alternatives to
competitors’ products.
Specialty goods are goods that require an unusually large effort on the part of
consumers to acquire. Consumers are usually willing to travel great distances to where these
goods can be purchased. Examples are branded luxury merchandise, works of art,
automobiles, and homes. The successful marketing of specialty goods require the promotion
of strong brand image and identities.
Unsought goods are goods that consumers seldom actively look for, and are usually
purchased for extraordinary reasons, such as fear or diversity, rather than desire. Examples
are investments, memorial plans, and life insurance. These goods require advertising and
aggressive selling and are usually marketed using highly-trained and persuasive
salespersons.
What’s More
Practice sheet
Activity 3: Marketing Process Diagram
Direction: Your going to explain the marketing process. Use the following diagram format.
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
___________________
Activity 4: Classification of Products/Goods
Direction: Your going to complete the diagram by giving an example for each of the
following goods/products.
1.
Activity 5: Classifying Goods
Direction: Classify the products or goods by checking the column that corresponds to their
answer.
Examples
1. Clothes
2. Detergent
powder
3. Aluminum
4. Newspaper
5. Memorial
plans
6. Investment
7. Automobiles
8. Bags
9. Candy/Gum
10. Luxury
items
Consumer
Goods
Industrial
Goods
Specially
Goods
Unsought
Goods
Shopping
Goods
Convenience
Goods
What I Have Learned
Activity 6: Reflection
Direction: Answer the following questions.
1. Marketing involves, among others, the delivery of value to consumers. However, the
value a consumer places on a particular products or service is subjective. If you are a
marketer, how can you increase customer’s assessment of your product/service?
Use a product/service of your choice as an example.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
____________________________________________________________________.
2. This is a common saying “All products sold involve the sale of service to a greater or
lesser extent. “Cite an example where product was sold because of an accompanying
service.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
__________________________________________________________________.
Lesson 1.2
Marketing Approaches and Services
What I Need To Know
The traditional approaches in marketing focused on the production methods, product
quality, and effective selling methods as profit drivers in marketing. In contrast, contemporary
marketing approaches are centered on the customer, relationships, and the well-being of
society.
General Objectives:
After going through, you are expected to:
 Discribe the traditional approaches to marketing;
 Identify contemporary approaches to marketing;
 Differentiate product marketing from marketing services; and
 Compute the market share
What’s In
Activity 7: Review from the past Lesson.
1. This is a common saying: “ All products sold involve the sale of services to a greater or
lesser extent.” Cite an example where product was sold because of an
accompanying service.?
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
____________________________________________
What's New
Activity 8: Explain in your own words.
1. Intangible - _____________________
2. Perishable - ____________________
3. Needs - ________________________
4. Wants - ________________________
5. Demands - _____________________
What Is It
Market Services
The characteristics of the services differentiate the services from the tangible goods.
The following are the characteristics of services:
1. Intangibility:
A Services are intangible and therefore cannot be touched, handled, smelt or tasted
(physical senses). This is because service itself is an activity. A service however, can be
experienced. A service also gives a certain amount of satisfaction to the consumers. On
account of the intangibility, there is no ownership created in case of services. A service
can only be generated and used and can never be owned.
2. Perishability:
A service has to be consumed simultaneously with its production. A service cannot
be stored like a tangible commodity. Services are perishable in terms of delivery and time.
An empty seat on a plane never can be utilized and charged after departure. Revenue
once lost is lost forever.
When the service has been completely rendered to the requesting service consumer,
this particular service irreversibly vanishes as it has been consumed by the service
consumer. Example – after the passenger has been transported to the destination, he
cannot be transported again to the previous location at the previous point of time.
3. Inseparability:
Commodities once produced can be sold at a later point of time but in case of
services it is not possible. Examples – In the cases of services of a doctor to his patient,
teacher to his student, the simultaneous presence of both-the producer of the service and
the consumer of the service at that point of time is absolutely necessary.
The service provider is indispensable for service delivery as he must promptly
generate and render the service to the requesting service consumer. Therefore the
service provider, the service itself and the service consumer are inseparable.
4. Simultaneity:
Services are generated and consumed during the same period of time. As soon as
the service consumer has requested the service (delivery), the particular service must be
generated from scratch without any delay. The service consumer instantaneously
consumes the rendered benefits to satisfy his wants. Therefore the production and
consumption of services are always simultaneous.
5. Variability:
Each service is unique. Services lack homogeneity. Example – a doctor treats two
patients with similar ailments on the same day. The level of satisfaction in the minds of
these patients after the treatment will never be the same. The difference is caused by
factors such as the mood of the doctor, the fatigue level of the doctor, the way the service
is perceived by the individual patient etc. There will a difference in the service even if the
same doctor treats the same patient on two different occasions.
This is because the moods of the doctor and the patient do not remain the same on both
the occasions. No two units of service are identical even if they are generated by the same
person. Factors like quality control, standardization etc. which can be very successfully
implemented in case of production of tangible goods cannot be applied in case of services.
Services always vary with each other.
No ownership is created in case of services. At the time of creating a service or delivering
a service, the service provider does not own the service. He only owns the physical
infrastructure necessary to create the service. Similarly at the time of consumption or after the
consumption, the service consumer does not own the service. He only consumes the service.
After the consumption, the consumer has only the experience but the service itself would
have become non-existent. A service cannot be owned by anybody because it is basically an
intangible product.
Needs, Wants, and Demands
Consumer needs are defined as physiological necessities required for human survival.
These universal needs include food, shelter, and clothing.
Wants, on the other hand, are more psychological, indicating preferences that can
improve the consumer’s life condition. For example, at noon, a consumer may have a sudden
and uncontrollable need to eat. This can be satisfied with food because eating is a need.
However, the consumer will not satisfy this need with just any type of food but will consider
what kind of food he wants. He will decide whether to have a pizza, a doughnut, a sandwich, or
a rice meal.
Market and Market Demand
Market is defined as the group of individual or organizational customers who have both
the willingness and financial capability to purchase a particular product or service. Capability to
purchase a product/service can be variable as it can expand or contract depending on certain
factors, e.g. selling price. When a product’s or service’s selling price is reduced, even if the
number of individuals willing to purchase remain constant, the reduced price may increase the
number of individuals who can now afford to buy the product or service.
Market demand is the total demand of all potential customers for a specific
product/service over a specific period in a specific market area.
Measuring Market Demand
Market demand can either be primary or selective. Primary demand refers to the total
demand for all brands of a particular product or service. It is sometimes referred to as total
industry demand. Selective demand, on the other hand, is the demand for a specific brand of
product or service.
Potential, Latent, and Current Demand
Potential demand emerges when there is no demand yet for a particular product/service,
but there exists a market with sufficient financial capability to purchase.
An example of this is an example of potential demand can be education courses where
there is very low demand or no demand at all. Such cases are very hard to counter.
Latent demand results when customers in a market are unable to satisfy specific desires
because no products/services exist in the market that can satisfy them. It can also result when
the product/service is available, but is priced beyond their reach.
a smartphone brand’s success due to the company’s ability to close the gap between the
current product bought and the ideal product the customer would like to use.
In order to satisfy latent demand, marketing organizations must:
 Introduce goods currently unavailable that are desired by customers;
 Influence and persuade customers to reallocate their expenditures towards the
company’s product; or
Offer credit, installment, or similar terms to make the product affordable to
customers.
Current demand is defined as the number of people of a particular market at present that
would actually purchase the product or service offered. This can be measured in several ways,
the most popular of which is through “intent to buy” survey.

An example of current demand are seasonal products like umbrella, air conditioners or
resorts. These products sell irregularly and sell more during season whereas their demand is
very low during non-seasons.
Utility, Value, and Satisfaction
Utility refers to the total satisfaction consumers can receive from the consumption of a
product or service.
Value, on the other hand, refers to the value customers place on a product or service.
Since consumers have different needs and buying capacities, consumers assign varying
values on the same product or service. The product with the highest quality does not always
provide the highest value for customers. The perception of value is affected by the cost
required to acquire the product or service.
Satisfaction is the measure of how well customer expectations from a purchased product
or service have been met.
To ensure maximum customer value and satisfaction, marketers must:
 Balance product or service quality and price.
 Establish consistency among product availability, level of customer service, and
efficiency.
 Create a buying atmosphere and deliver purchase convenience.
Customer-Perceived Value
Customer-perceived value is the quantitative difference between the expected benefits
and costs of a particular product or service in comparison to a similar product or service.
Customers rarely have an accurate assessment of the value and cost of a product or service,
and make purchases based on their perception of its ability to satisfy his/her needs and
requirements.
To enhance their customers’ perceived value of products or services, marketers advertise
aggressively and invest heavily in highlighting products features. In the case of cosmetics and
personal care products, companies invest heavily in packaging and labeling.
Some marketing organizations conduct marketing research to identify the perceived
values consumers attach to specific products/services.
Customer Value Proposition
A customer value proposition is a comparison of the benefits offered by a company’s
products to its customers in relation to the amount it is asking customers to pay. Customers
always ask question: “What’s in it for me?”
Marketing strategies enhance a product’s customer value proposition by emphasizing key
attributes of the brand in relation to competitors’ brands and communicating to
customers: ”Why us?”
Competition
A competitor is any company in n industry or similar industry that offers a similar product
or service
Levels of Competition
A firm’s competition can be classified either as a desire, generic, form, or brand
competitor.
Figure 4: Levels of Competition
1. Desire Competitors
“What desire do I want to satisfy?”
 Eat
 Text
 Read
 Drink
3. Form Competitors
“What kind of sandwich?”
 Chicken
 Cheese
 Hotdog
 Hamburger
2. Generic Competitors
‘What do I want to eat?”
 Sandwich
 Dimsum
 Pasta
 Chicken
4. Brand Competitors
“What brand of hamburger sandwich?”
 Wendy’s
 McDonald’s
 Jollibee
 Burger KIng
 Army Navy
The most basic type of competition is desire competitors. For example, eating is a
“desire” or “need” that a customer wants to satisfy at a particular time or occasion. This is
identified and established first before the customer starts thinking of a possible destination to
satisfy his “desire” or “need”.
The customer then considers a number of available options. These are the generic and
form competitors (sometimes called “indirect” competitors). Although these two levels a
customer selects a chicken sandwich instead of a hamburger, the hamburger fast food chain
can no longer generate revenue from the customer because:
1. The “desire” or “need” of the customer has already been satisfied and he is no longer
(for the moment) interested in food.
2. If the customer is on a limited budget, he/she may have already spent his/her monetary
allocation for food.
On the other hand, brand competitors are the most “direct” competitors because they
offer the same form of product the customer has finally decided to consume.
The Concept of Market Share
The effectiveness of marketing strategies in an industry can be measured using what is
referred to as market share. Market share, expressed in percentage, is the share of a
company’s revenues divided by the total revenues of its industry in a particular year.
Market share is calculated using the following formula:
Company A’ Market Share -
Company A’s annual revenue
x
100
Total annual revenue of Company A’s Industry
Since sales revenue is the basis for determining market share, companies often boost
sales through product introduction and innovation, price reduction, intensive advertising, and
aggressive promotional efforts, among other activities.
The company with the largest market share in an industry is the industry’s market leader.
Market leadership is aspired after by many industry is the industry’s participants. Aside from
the prestige, market leaders usually lead the industry in price changes, advertising and
promotional intensity, and new product introductions. More often than not, market leaders
manufacture and market the largest number of product units in an industry. They are likewise
often the most profitable due to production scale and distribution efficiency.
Traditional Approaches to Marketing
Evident up to the late 1960’s traditional approaches in marketing focused on production
methods, product quality, and effective selling methods as profit drivers in marketing.
1. The Production concept
The Production concept assumes that customers prefer products that are
inexpensive, affordable, and widely available. Efforts are concentrated toward expanding
distribution, and improving production efficiency. The objective is to lower production
costs resulting in lower process. However, this concept is relevant only if customer tastes
and preferences are stable and product demand is high.
2. The Product Concept
The product concept assumes that customers will always prefer and patronize
products of high quality. Resources are focused on product improvement and innovation.
Product attributes and features are continuously enhanced. While this may be important,
too much preoccupation on product quality may neglect the customer’s changing needs.
3. The Selling Concept
The selling concept emphasizes aggressive selling and promotional efforts. It
assumes that customers are generally timid and must be persuaded into buying. The
objective is to sell what is manufactures rather than manufacture what the market wants.
Contemporary Approaches to Marketing
Marketing is all about understanding the needs and preferences of your audience rather
than serving them what the company has to offer. The contemporary approach of marketing
focuses on the customer and their needs towards the product and the services. This theory is
based on the importance of traditional marketing orientation versus customer
orientation. They use different tactics and strategies to build a relationship with their clients
and targeted audiences.
Contemporary approaches to Marketing includes the following;

Relationship marketing

Industrial marketing

Social marketing
Relationship marketing is a strategy that helps the brand develops a strong connection
with their customers. It helps the brands in forming long-term bonds with their loyal customers.
It is essential to maintain and establish relationships with customers and other brands these
days. It is beneficial for brands as it helps them understand their audience in the long-run.
Industrial marketing, also known as B2B or business-to-business marketing is a branch
of marketing which involves one business dealing or marketing their goods and services to
another business. Rather than the customer base, the brands are targeting industrial
customers in this type of marketing. Long-term relations can be built if the industrial buyers are
adequately satisfied. However, the total number of business buyers will be less in comparison
to the number of customer buyers.
Social marketing is an approach of marketing which seeks to bring any social change. It
integrates marketing theories and tactics with other plans to achieve social change. Social
marketing is aimed at benefiting individuals and different communities of society. Social
marketing should not be mistaken with social media marketing in any way. This approach
focuses on changing human behavior. This branch of marketing works for the welfare of the
people which helps the brands creates their positive image in the eyes of the customer.
Thereby, helping the brands create long-term relations with their customers.
Contemporary approaches followed by organizations:
 Cause Marketing – It is the type of marketing in which a company and charity team up
together and spread awareness for a good cause. If the campaign is successful, it can
help in increasing the business value for the company.
 Event marketing – It is the type of marketing in which marketers conduct promotional
events and promote their products and services in those events. This involves face to
face contact and helps in increasing the credibility of the brand.
 Green marketing – It is the practice of marketing in which the services and goods are
marketed from their environmental benefits. Research has shown that the customers
are willing to pay extra for products from companies which are concerned about the
environment and committed to sustainable development
What's More
Activity 9: Market share
Complete the table below by computation.
Company
Market Share
1. A
2. B
3. C
4. D
5. E
Company’s Annual
Revenue
P 600,500,000.00
P 350,000,000.00
P 156,000,000.00
P 65,000,000.00
P 120,000,000.00
Total revenue of
Company’s Industry
P 950,000,000.00
P 765,000,000.00
P 845,000,000.00
P 487,000,000.00
P 355,000,000.00
What I Have Learned
Activity 10: Reflection
Direction: Write your own answer. (Shorts Explanation only).
1. A company makes a pair of shoes (a semi-durable) that can last for more than 10
years, Is this art advantage or a disadvantage for its customers? Explain
2. People “need” to eat. Some “want” to eat pizza or a sandwich. Is it possible for a
“want” not to emanate from a “need”? Explain by relating your experience.
What I Can Do
Activity 11: Compare and Contrast
Direction: In a separate sheet of paper. Using Venn Diagram, Write the similarities
and differences of the traditional and contemporary approaches to marketing.
Traditional
Aproaches to
Marketing
Similirities
Contemporary
Approaches to
Marketing
Direction: Multiple Choice
1. This refers to measure of how well customer expectation from a purchased product or
service have been met.
a
c.
Consumer goods
Marketing
b.Satisfaction
d. Brand equity
2. This is the appreciation in a brand’s value from the point of view of customers.
a. Brand equity
c.Marketing
b.Satisfaction
d. Consumer goods
3. These are products whose physical characteristics are so identical, that it would be difficult,
it not impossible, to distinguish one purchased from one vendor or another.
a. Brand equity
b. Marketing
b. Consumer goods
d. Primary Demand
4. It is a form of communicating or promoting the value of a product, service, or brand to the
consumers.
a. Durable
c.Marketing
b. Primary demand
d. Consumer goods
5. This can used in marketing to describe the way in which a service capacity cannot be
stored for sale in the future. Services cannot be stored, saved, returned, or resold once
they have been used. Once rendered to a customer, the service is completely consumed
and cannot be delivered to another customer.
a. Intangible
c.Perishable
b. Inseparable
d. Variable
6. This is the ability of manufacturers to successfully distinguish their products from other
competitors.
a. Undifferentiated goods
c.Differentiated goods
b. Industrial goods
d. Branding
7. These is more psychological, indicating prefenrences that can improve the consumer’s life
condition.
a. Needs
c.Value
b. Demands
d. Wants
8. These are products that are manufactures to last a long time.
a. Durable
c.Consumable
b. Semi-durables
d. Shooping goods
9. These give thier potential clietns an impression of their competence and capability to render
the service required.
a. Intangible
c.Perishable
d. Variable
b. Inseparable
10. It refers to the total demand for all brands of a particular product or service.
a. Latent demand
c.Primary demand
b. Current demand
d. Selective demand
11. It is the total demand in the Philippines is challenging because few accurate published
industry statistics are available.
a. Demands
b. Value
b. Wants
d. Needs
12. These are goods that are purchased for personal consumption and/or for household use.
a. Branding
c, industrial goods
b. Differentiated goods
d. Undifferentiated goods
13. This is defined as physiological necessities required for human survival.
a. Demands
c.Value
b. Wants
d. Needs
14. The number of people of a particular market at present that would actually purchase the
product or service offered.
a. Primary demand
c.Selective demand
b. Current demand
d. Latent demand
15. It is a product whose benefit can only be used by a consumer for a short period of time,
sometimes only few minutes.
a. Consumable
c.Durable
.
b. Semi-durable
d. Satisfaction
Answer key
References
https://www.google.com/search?q=marketing+images&tbm=isch&chips=q:marketing+im
ages,g_1:social+media:_gl5XrAVglw%3D&hl=en-GB&sa=X&ved=2ahUKEwjSy4Klmo3rAhVF
WpQKHdy-A4gQ4lYoA3oECAEQGw&biw=1349&bih=576#imgrc=c870KTecJ5KW6M&imgdii
=BpVqZLBepkp75M
SENIOR HIGH SCHOOL
Principles of Marketing
Quarter 1 - Module 2
Customer Relationship: Customer
Service
This instructional material was collaboratively developed and
reviewed by educators from public and private schools, colleges,
and/or universities. We encourage teachers and other education
stakeholders to email their feedback, comments, and
recommendation
to
the
Department
of
Education
at
action@deped.gov.ph
We value your feedback and recommendation.
Department of Education Republic of the Philippines
For the facilitator:
For the learner:
Introductory Message
TABLE OF CONTENT
What I Need To Know
Learning Competency:
 Define “relationship marketing” (ABMˍPM11-Ic-d-5)
 Explain the value of customers (ABMˍPM11-1c-d-6)
Learning Objectives:
At the end of the lesson, students are expected to:
 Define relationship marketing
 Explain the value of customers
 Identify and describe relationship development strategies
 Illustrate successful customer service strategy in the Philippine business
enterprise
What I Know
Activity 1.1 Pre-test
Directions: Read each statement carefully. In a separate sheet of paper, write TRUE if
the statement is correct and FALSE if the statement does not fit the description.
______________ 1. A customer is a person or organization that transacts with a
business person or business organization to buy goods or services for monetary or
other valuable considerations.
______________ 2. Customer Relationship Management can take on many
forms-salespersons assistance, product delivery, technical advice, help desks, or
other means.
_______________ 3. Companies can best manage customer service quality by
establishing service objectives with specific and measurable targets.
_______________ 4. Customer service is a process of managing an organization’s
interactions with current and future customers.
________________ 5. By Knowing the value or worth of its customers, a company
can focus its resources in attracting and keeping the “right” type of customers.
________________ 6. The customers are the lifeblood of any business.
________________ 7. The business is the one responsible for sealing the deal with
customer.
________________ 8. A customer’s lifetime value can be based upon the potential
value and profitability of his/her relationship with the company.
________________ 9. Organizations must constantly bear in mind that it is better to
exceed customer service expectations than to simply fulfil or underachieve them.
________________ 10. In order to ensure the consistency of customer service
quality, organizations conduct rigid customer service training and assess seldom how
well services are delivered.
What’s New
Have you ever experienced good customer service from a certain establishment?
Recall the details of this experience. Why do you think good customer service is
important for an establishment to progress? What are the different ways to provide
good customer service?
What Is It
(DISCUSSION)
Relationship marketing
Is a form of marketing developed from direct response marketing campaigns that
emphasizes customer retention and satisfaction rather than sales transactions. It
differentiates from other forms of marketing in that it recognises the long-term
value of customer relationships and extends communication beyond
intrusive advertising and sales promotional messages. With the growth of the
Internet and mobile platforms, relationship marketing has continued to evolve as
technology opens more collaborative and social
channels such as tools for
managing relationships with customers that go beyond demographics and customer
service data collection. Relationship marketing extends to include inbound
marketing, a combination of search optimization and strategic content, public
relations, social media and application development.
Customer
Is a person or organization that transacts with a business person or business
organization to buy goods or services for monetary or other valuable considerations.
Acquiring and keeping customers is the end goal of businesses because customers
create demand. Through customers’ purchases, organizations are able to cover
manufacturing costs, operating expenses, and generate profits. Because businesses
have to be sustainable, products or services are not expected to be purchased only
once. They need to be purchased over and over again in order to maintain profitable
and sustainable operations.
Consumables such as biscuits and instant noodles are bought frequently. Other
products like shopping goods are purchased less frequently. A mobile phone maybe
bought once every year, and a car, perhaps every five years. Real estate and
properties may be purchased every 10-15 years, or even longer.
Because customers have varying needs and preferences over time, organizations
must be able to offer products and services at the time when customers need them.
Marketers cannot force the customers to buy any product or service that the
company offers. Instead, consumer needs and wants must be understood and
anticipated, as well be satisfied adequately and exceedingly. Companies must predict
customer needs.
Since there are other businesses that offer the same product or service to the
same customers, companies outdo each other in terms of value offering. Once an
individual becomes a customer, everything must be done to ensure that the
customer is kept and retained.
Customers wield tremendous influence over other people. A satisfied customer
shares his experience with relatives and friends, which can result in additional sales.
On the other hand, when a customer is not satisfied, the experience he shares will
dissuade other people from purchasing the product. This becomes a cause for
concern when the customer vents his dissatisfaction to social media which has the
tendency to magnify these positive and negative experiences.
Customer Service
Is the process of ensuring customer satisfaction with a product or service. Customer
service can take on many forms – salesperson assistance, product delivery, technical
advice, help desks, or other means. It involves activities designed to enhance
customer satisfaction, or the perception that a product has met or exceeded
expectations. This perception can be shaped and influenced by the level and type of
service that the customers receive before, during, and after the actual purchase.
Good customer service can lead customers to perceive the value offered as superior
over its competitors. This is because a customer not only buys a product or pays for a
service, but also the entire purchase or shopping experience.
The value of customer service is evident in the local setting. Call center
representative is one of the most in demand jobs in the Philippines where they assist
customers with online transactions and/or reservations, product information and
many others via telecommunications.
It is important to know the customers’ feedback from using their product as well
as their competitors’ product. That is why organizations provide platforms for the
customers’ feedback.
Managing Customer Service Quality
Maintaining high levels of customer service quality may be challenging due to
variability of services. In order to ensure the consistency of customer service quality,
organizations conduct rigid customer service training and assess periodically how
services will are delivered. This assessment can result in the identification of
customer service problems, areas of improvement, and current levels of customer
satisfaction.
Maintaining customer service quality is important. Disgruntled customers tend
to tell others about a bad service experience more often than a pleasant one. This
can lead to deterioration of the organization’s image. It shall be perceived as being
unable to deliver the level of service expected by customers.
Companies can best manage customers’ service quality by:
 Establishing service objectives with specific and measurable targets
 Committing sufficient organizational resource towards the achievement of
these targets
 Collecting customer feedback on service quality regularly
 Reviewing target accomplishment
 Identifying customer service weaknesses and connecting them
Organizations must constantly bear in mind that it is better to exceed
customers’ service expectations than to simply fulfil or underachieve them.
Managing Customer Service Differentiation
How can organizations make their customer service stand out? How they can they
protect their services from being duplicated by competitors? For physical product,
differentiation can be easily undertaken and protected through patents. This is,
however, not the case with services.
Customer-centered organizations can differentiate their customer service
through: (1) the development and training of competent customer contact personnel
and (2) designing and implementing a superior service delivery environment and
process.
Organizations should continuously improve their customer service. An intimate
knowledge and understanding of customer needs and wants can lead to effective
customer service that can result in long-term customer loyalty.
The following are some of the more popular customer service practices in the
Philippines:
Customer Service Practice
Practicing Organization (s)
Free delivery
Most restaurants and fast food chains
Automated in-home ordering system
Some supermarkets and drug stores
Free gift wrapping/plastic book jacket
Some department stores and book
stores
Merchandise/document pick-up
Selected courier services
Free parking
Some
churches
and
religious
organizations
Valet parking
Some hotels and resorts
Reservations, instalment plans
Some
large
department
stores,
bookstores
Complimentary refreshments, waiting Most car dealership
lounge
Help desk, touch phone access, 24-hour Most
utility
firms
and
customer hotline
telecommunication firms
Free appliance installation
Most appliance stores
Scheduled floral bouquet delivery
Some flower shops
Drive-Through
Most fast food outlets
Free-alterations on garments
Selected apparel retailers
Complimentary massage
Some barbershops and salons
Customer Relationship Management
At its core, customer relationship management (CRM) is all of the activities,
strategies and technologies that companies use to manage their interactions with
their current and potential customers. A saying frequently heard and said in many
businesses is "customer is king."
CRM helps businesses build a relationship with their customers that, in turn, creates
loyalty and customer retention. Since customer loyalty and revenue are both
qualities that affect a company's revenue, CRM is a management strategy that
results in increased profits for a business. At its core, a CRM tool creates a simple
user interface for a collection of data that helps businesses recognize and
communicate with customers in a scalable way.
Initially, marketing companies create and maintain customer database that
record and keep the following information: customer names, birthdates, contact
numbers and physical and email addresses. The information progresses to include
customers’ buying history and behaviour (i.e., what they buy, when and where they
buy, in what quantities and prices, and their responses to sales promotion efforts).
While most consumers may not be willing to share personal information,
product retailers utilize different strategies to coax customers into sharing. A
common practice is through shopper’s club. Benefits of joining the club include
earning points on purchases or participation in in-store contests. The customer
swipes his membership card at the check-out counter every time he/she shops. This
updates his/her purchasing history. The information can yield customer purchased
value, preferences, and buying habits, among others.
Customer database information is also used in customer segmentation and
profiling. Through databases businesses can have a precise identification of their
customer base. This information could include the geographical area of their
residence or work, the distance they are willing to travel to shop, their age profiles,
and occupations. Knowing the customer’s date of birth can reinforce relationship
with the customer. It is common for loyal customers to receive greetings from stores.
Email addresses can be used to update customers on new merchandise, promotional
offers, and other store activities.
Customer shopping history can be used to accurately identify the type of
merchandise frequently purchased, the amount spent, the preferred days for
shopping, etc. Promotions can be personalized so that customers will only receive
those that truly interest them and are most likely to purchase.
Effective guidelines in the implementation of customer relationship management:
1. Adopt the right mind set towards customer service.
2. Purchase or develop CRM software.
3. Quantity customer acquisition and retention costs.
4. Develop and implement a customer service training program.
5. Empower sales persons to make decisions.
6. Establish communication lines between your customer and customer contact
staff.
7. Shop your competition.
8. Keep innovating customer service.
9. Promote genuine customer service with passion.
Customer Lifetime Value
Customer Lifetime Value (CVL) is the forecasted sales or profits that a company can
derive from the entire span of its future relationship with a particular customer.
A customer’s lifetime value can be based upon the potential and profitability of
his/her relationship with the company.
The CVL perspective has several distinct implications:
 It considers a longer-term perspective of a company’s relationship with
customers in contrast to a short-term view of “take the customer’s money
and run.”
 It calculates and compares costs of acquiring customers and keeping old ones.
This can be used to determine the revenues that are lost when an existing
customer switches to another product. Costs for getting new customers are
called acquisition costs, whereas, cost for maintaining existing customers are
called retention costs. These are normally in the form of customer support
and promotional incentives.
 It highlights the importance of market segmentation, with the recognition
that some customer groups are more profitable than others.
CVL can be measured using the formula:
CVL= (PV) (RP) (RT)
Where: PV is the average peso value of a sale to a particular customer or customer group
RP is the repeat purchase in a year
RT is the retention time in months or years
CVL is the customer lifetime value
For example, an athlete who spends ₱2,000.00 for every visit to a spa and goes to the spa twice a
month for an expected time period of five years would have a CVL computed as:
Let PV = ₱2,000.00
RP = 24 (twice a month for 1 year)
RT = 5
CVL =?
CVL = (PV) (RP) (RT)
= (2000) (24) (5)
= ₱240.000.00
The athlete’s Customer Lifetime Value is ₱240.000.00
What’s More
Activity 1.2: Customer Lifetime Value
Direction: In a separate sheet of paper, compute the CVL for the following situation.
Follow the guide provided below. (5 points each)
1. Mrs. Abad spends ₱4,000.00 for every visit to a supermarket twice a month for an
2.
3.
4.
expected time period of five years.
Mr. Alfonso spends ₱1,500.00 for every visit to a fast food chain with his wife and 2 children
once a month for an expected time period of one year.
A senior high school student spends ₱500.00 for every visit in a bookstore once every 3
months for an expected time of 9 months.
An overseas Filipino Worker from Dubai spends ₱3,000.00 for every package she sends to the
Philippines via courier service once a year for an expected time period of three years.
PV = ________
RP = ________
RT = I________
WHAT
HAVE LEARNED
Computation:
CVL = _______
What I Have Learned
WHAT I HAVE LEARNED
Activity 1. 3: Reflection
Direction: In a separate sheet of paper, answer the following questions.
1. Why is it important to have an excellent customer service for your
customers?
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
___________________________
2. In what ways can employers empower their salespeople to provide excellent
customer service?
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
____________________________________
What I Can Do
Activity 1.4
Direction: in a separate sheet of paper, using the graphic organizer below. Cite some
importance of a good customer service. Write it in each partition on the wheel.
(Answer may vary)
Importance of a
good customer
service
ASSESSMENT
Activity 1.5
Directions: Read each statement carefully. In a separate sheet of paper, write TRUE if the
statement is correct and FALSE if the statement does not fit the description.
__________ 1. CRM helps businesses build a relationship with their customers that, in turn,
creates loyalty and customer retention
__________ 2. Customer database information is also used in customer segmentation and
profiling.
__________3. An intimate knowledge and understanding of customer needs and wants can
lead to ineffective customer service that can result in long-term customer loyalty.
__________ 4. Acquiring and keeping customers is the end goal of businesses because
customers create demand.
__________ 5. Maintaining high levels of customer service quality may be simple due to
variability of services.
__________ 6. Customer’s lifetime value involves activities designed to enhance customer
satisfaction, or the perception that a product has met or exceeded expectations.
__________ 7. Customer Relationship Management can take on many forms-salesperson
assistance, product delivery, technical advice, help desks, or other means.
_________ 8. Organizations must constantly bear in mind that it better to exceed customer
service expectations than to simplify fulfil or underachieve them.
_________ 9. Store owner is a person that transacts with a business person or business
organization to buy goods or services for monetary or other valuable considerations.
__________ 10. companies can best manage customer service quality by establishing service
objectives with specific and measurable targets.
ADDITIONAL ACTIVITY
Activtity 1.6
Direction: In a separate sheet of paper, answer the following questions:
A. Why is there a need to maintain relationships with customers? Does this
apply to the neighbourhood sari-sari store? Explain.
B. Narrate your recent shopping experience. Was it pleasant? Were you
satisfied? Explain how customer service played a role in your experience.
ANSWER KEY:
Activity 1.1
1. True
2. False
3. True
4. False
5. True
6. True
7. False
8. True
9. True
10. False
Activity 1.2
1. ₱480,000.00
2. ₱36,000.00
3. ₱1,200.00
4. ₱9,000.00
Activity 1.5
1. True
2. True
3. false
4. true
5. False
6. False
7. False
8. True
9. False
10. true
References
https://www.google.com/search?q=marketing+images&tbm=isch&chips=q:marketing+im
ages,g_1:social+media:_gl5XrAVglw%3D&hl=en-GB&sa=X&ved=2ahUKEwjSy4Klmo3rAhVF
WpQKHdy-A4gQ4lYoA3oECAEQGw&biw=1349&bih=576#imgrc=c870KTecJ5KW6M&imgdii
=BpVqZLBepkp75M
SENIOR HIGH SCHOOL
Principles of Marketing
Quarter 3 - Module 3
MARKETING OPPORTUNITY ANALYSIS
AND CONSUMER ANALYSIS
This instructional material was collaboratively developed and
reviewed by educators from public and private schools, colleges,
and/or universities. We encourage teachers and other education
stakeholders to email their feedback, comments, and
recommendation
to
the
Department
of
Education
at
action@deped.gov.ph
We value your feedback and recommendation.
Department of Education Republic of the Philippines
For the facilitator:
For the learner:
Introductory Message
TABLE OF CONTENT
What I Need To Know
Learning Competencies:
 Distinguished between strategic and tactic marketing; and Planning in terms of objectives
and processes (ABM_PM11-le-i-9)
 Analyze the elements of macro- and micro-environment and their influence to marketing
planning (ABM_PM11-le-i-10)
 Define marketing research, it’s importance to a business enterprise and identify the steps
in marketing research (ABM_PM11-le-i-11)
 Differentiate the buying behavior and decision making of individual/household customer
versus the business (organizational) customer (ABM_PM11-le-i-13)
 Identify and segment market for a product or service (ABM_PM11-le-i-14)
 Select the appropriate target market segment and its positioning (ABM_PM11-le-i-15)
What I Know
Activity 1: Diagnostic Test
Instructions: Match column A with the correct phrase in column B. Write only the letter of the
answer on the space provided.
A
_____________ 1. The information from these researches helps
marketers identify macro-environment shifts.
______________ 2. These studies can provide cost-effective
ways on how to increase a
product’s/service’s awareness level and brand is a valuable
tool in site selection.
______________ 3. It determines ideal retail store locations and
is a valuable tool in site selection.
_____________ 4. It can be used to decide on the packaging, to
determine the market reaction, and to justify brand positioning.
____________ 5. It reveals the effectiveness of point-ofpurchase collateral materials.
________________ 6. These help identify, quantity, and
understand the target market better.
______________ 7. These tests can determine advertising copy
effectiveness, advertising re-call, sales promotion, response
rates, and outdoor advertising traffic results.
_____________ 8. It can be utilized by marketers to calculate a
product’s or service’s optimal price, and to determine price
elasticity.
____________ 9. Based on these results, the company shall
gauge the acceptability of a proposed product/service.
______________ 10. It includes individuals and/or house-holds
that purchase products and services for personal consumption.
Lesson 1
Distinguished between strategic and tactic marketing; and Planning in
terms of objectives and processes (ABM_PM11-le-i-9)
Analyze the elements of macro-environment and micro-environment and
their influence (ABM_PM11-le-i-10)
What I Need To Know
The strategic marketing process seeks to establish a clear and concerted direction for all
marketing activities of an organization while the tactical marketing process determines the
means or tactics to implement the strategies. Thie marketing environment refers to factors and
forces that affect a firm’s ability to build and maintain successful relationships with customers.
Its elements include Micro-environment and Macro-environment.
General Objectives:
After going through, you are expected to:
 Distinguish between strategic and tactical marketing in terms of Objectives and
processes; and
 Analyze the elements of macro-environment and micro environment and their
influence to marketing planning processes.
What’s New
Activity 2:
Direction: Differentiate in your own words. 2 sentence only
1. Strategy ___________________________________________________________________
__________________________________________________________________
2. Tactics
___________________________________________________________________
__________________________________________________________________
What Is It
Strategic Marketing Process
The strategic marketing process seeks to establish a clear and concerted direction for all
marketing activities of an organization. It includes plans to reach specific goals/objectives. The
strategic marketing process is depicted in the following diagram:
Mission
identification
Situation
analysis
Strategy
evaluation
and control
Objective
setting
Marketing
strategy
development
Step 1: Mission Identification
The company’s mission statement is articulated. A mission statement defines what an
organization is, why it exists, its reason for being, its primary customers, the products and
services it produces, and its geographical area of operation.
For example, an international consumer goods company’s mission statement is “to
provide branded products and services of superior quality and value that improve the lives of
the world’s consumers. As a result, consumers will reward us with industry leadership in sales,
profit, and value creation, allowing our people, shareholders, and the communities in which we
live and work to prosper.”
Step 2: Situation analysis
This step assesses and evaluates the market, customers, competitors, and the
company’s internal and external environment. The objective is to identify the company’s
strengths and weaknesses, as well as the available opportunities and possible threats.
Step 3: Objective setting
Objectives are marketing targets that are specific, Measurable, Attainable, Realistic, and
Time-bound (SMART). These enable a company to control its marketing plan and provide a
consistent focus all functions of an organization. These objectives include sales revenues,
market share, and profits. They are used as basis for strategy selection and development.
Step 4: Marketing strategy development
The development of a marketing strategy involves market segmentation, identification of
target market, positioning, selection of broad marketing strategies, and the translation of
strategies into action plans.
Strategy can be broadly classified into three categories. These are cost leadership,
differentiation, and focused.
(Authors’ note: Examples are hypothetical and for academic purposes only.)
Cost Leadership
This is a strategy primarily for achieving low cost leadership among industry competitors.
Cost leadership can be achieved through low cost supply contracts, overhead expense control,
economics of scale, and comprehensive cost-cutting efforts, among others.
Example: While 16” desk fans ordinarily retail fro P 1,000.00, a local appliance brand is
able to market the same at 635.00 through mass production.
Differentiation
Differentiation seeks to achieve superior product attributes and features that are different
from industry competitors. This results in pronounced consumer preferences for the
company’s products.
Example: A mobile phone brand introduces its version of the smartphone that does not
have a keyboard but is activated and controlled by thought.
Focused
Efforts are concentrated on a relatively small but profitable market. The development of
products and services primarily ensures that the needs and want of this addressed and that
satisfaction is provided.
Example: A convenience store that concentrates on the very high-end niche market by
converting its operations into convenience stores with superior customer service, selling purely
imported and high quality products and gourmet food prepared by resident chefs.
Cost leadership, differentiation, and focused strategies may be implemented through the
following sub-categories of strategies:
1. Forward integration
This involves gaining ownership or increased control over distributors or retailers.
Example: A known newspaper company buying 418 newspaper stands in Metro
Manila
2. Backward integration
This involves gaining ownership or increased control over suppliers.
Example: A consumer goods company in the Philippines purchasing a cow farm and
dairy
facility in General Santos City
3. Horizontal integration
This involves purchase of or increased control over competitors.
Example: A pizza company buying a controlling interest in another pizza company
4. Market penetration
The objective of this strategy is to increase market share of current products or
services in
current markets through greater and more intensive marketing efforts.
Example: A doughnut company launching a P 56 million advertising campaign
directed at
current customers
5. Market development
This strategy involves the introduction of existing products or services into a new
geographical area or market.
Example: A private learning institution opening a campus in Cebu City
6. Product development
This strategy involves the improvement of current products or services or the
development of new products with the purpose of increasing sales.
Example: A company on carbonated beverages introducing its product line in tetra
pack
7. Related diversification
This involves introducing new but related products or services.
Example: Battery manufacturers introducing solar powered automotive batteries
8. Unrelated diversification
This involves introducing new but unrelated products or services.
Example: A bank opening a chain of ice cream parlors
9. Retrenchment
This involves halting or reversing declining sales and profits through cost or asset
reduction.
Example: A shopping mall selling off its hardware department and laying off 847 of its
department store employees
10. Divestiture
This involves selling a division or part of an organization.
Example: A conglomerate selling an airline
11. Liquidation
This involves selling all of a company’s assets, in parts or as a whole, for their
tangible worth.
Example: A prime holdings company selling all its companies.
Step 5: Strategy Evaluation and Control
After the strategy is developed, periodic monitoring and evaluation are needed. This is
necessary to identify deviations and necessary adjustments and corrections.
The Tactical Marketing Process
Completing the strategic marketing process, the tactical marketing process determines
the means or tactics to implement the strategies. It involves the identification of specific
activities, timetables, responsibilities, and budgets and their implementation. The objective is
to ensure that the strategies are implemented successfully
Marketing
Strategies
Action Plans/
Tactics
Monitoring
and Control
Marketing
Activities
Activity
Budgets
Activity
Timetables
Responsibility/
Accountability
For example, a company determines to increase sales by 10% by the end of the calendar
year. After careful consideration, it selects market penetration as its strategy.The current task
is to identify the tactics, or activities that it should undertake to ensure that the strategy will be
successful. The firm may decide to increase selling prices. It may opt to do intensive
promotions, or it may invest in heavy product advertising.
Once the tactics and activities are identified, they are developed into an action plan. An
action plan is a sequential series of marketing activities. It includes timetables for each activity,
pinpointed responsibilities or accountability for each, and the corresponding budgets.
Oftentimes, it is necessary to utilize two or more action plans to ensure successful
implementation. These are monitored regularly to ensure effectiveness.
MARKETING MICRO-ENVIRONMENT
The marketing micro-environment includes forces that are internal to the company or
those that are relevant to its operation. It is composed of the company itself, its suppliers,
market intermediaries, customers, competition, and its various public's. The consideration of
these is important as they affect the company’s ability to build and maintain sustainable
relationships with current and prospective customers.
1. The Company
Marketing may be the “lifeblood” of an organization, but it cannot exist independently
of other organizational functions. These functions include research and development,
finance, operations, and human resources. Recognition of the importance of these
functions is essential for marketing. Moreover, marketing cannot function in a vacuum as
marketing decisions must always be aligned with the organization’s goals and strategies.
2. Suppliers
Suppliers provide raw materials, utilities, labor, capital, and equipment. The
availability and prices of these supplies should be monitored. Effective partnership or
relationship management with suppliers is essential. The performance of suppliers can
directly impact an organization’s ability to continuously satisfy its consumers.
Substandard raw materials will negatively affect product quality, and the unstable supply
process may hurt profits and affect the organization’s ability to provide superior value to
customers.
3. Market Intermediaries
Intermediaries are channels that link the organization to its customers. Most products
are delivered and distributed to customers through intermediaries. In comparison to
organizations distributing products by themselves, distribution through intermediaries is
more practical and less costly. The most common intermediaries are distributors,
wholesalers, and retailers. Aside from distribution, market intermediaries also help in the
promotion of products.
4. Customers
Customers create the demand for products and services. They can either be
customers or end-users, businesses, or organizations. Companies must attract and
maintain customers through products and services that meet and exceed customer
expectations.
5. Competition
The demand for a company’s products and services is affected by the nature and
intensity of competition. Knowing a competitor is critical to the success of the firm.
Monitoring the movements of competitors is essential because competition is not static
and is very volatile. Competitors may introduce new and/or improved products in the
market. They may also actively implement price changes and launch advertising and
promotional campaigns. To create and maintain relative advantage, companies must be
ready and quick to respond to these movements.
6. Public's
Public's may include any individual or entity with an actual or potential interest in
company and its products or services. These include the shareholders, the community,
financial institutions, media, the government, and society. Shareholders expect a
reasonable return on their investment. Consumer advocate groups and the media may
build or destroy the reputation of the product or service. Financial institutions can hinder a
company’s ability to secure funds. The government may pass and implement laws that
can either liberalize or restrict a company’s actions. An organization’s public’s can affect
the competitiveness of the company, and to some extent, pose a threat to its survival.
Identifying Strengths and Weaknesses
Strengths and weaknesses can either be controllable or uncontrollable. The factor s
present within the company are within the firm’s control. The five other forces (suppliers,
market intermediaries, customers, competition, and the various public’s) are essentially
uncontrollable although they are within the sphere of the company’s influence.
For example, a poor or confrontational working relationship between marketing and
the other organization’s functions can result in delayed, stunted, or even aborted
marketing plans.Suppliers that are not treated as essential partners can result in poor
material quality, delayed deliveries, and unwarranted price increases.
In like manner, highly motivated market intermediaries can give preference to a
company’s products over others. Financial institutions can just as readily provide loans
and credit on a timely basis.
Marketing micro-economic factors that are favorable to a firm are classified as
strengths, while unfavorable factors are termed as weaknesses. Companies should utilize
strengths as the foundation for effective strategies, with the most dominant and
sustainable strength as its major competitive action, and eventually be converted to
strengths.
MARKETING MACRO-ENVIRONMENT
All business organizations operate within a particular macro-environment. The marketing
macro-environment includes factors that are external to the organization. Essentially, these
can neither be influenced nor threats; which the company must avoid.
The importance of the macro-environment can be compared to the scenario of a
commercial flight from Manila to the United Arab Emirates (UAE). Pilots request information
from the air control tower to determine the route. Weather forecasts are crucial in determining
particular areas of turbulence and other weather anomalies. Timely reports are received en
route to avoid unwanted delays due to air traffic. Updates from the control tower identify the
positions of other aircraft to prevent collisions. The date on wind speed and direction can be
used to take advantage of strong tailwinds to reduce flying time and fuel consumption. Prior to
landing at the UAE airport, the pilot requests for a wind shear report to determine if the wind
conditions at the point of destination is conducive for a safe landing.
In business, the macro-environment refers to the economic, politico-legal, sociocultural,
demographic, technological, and natural environments. Although there are many, only the
factors that are directly relevant are considered. The factors that indicate some level of
uncertainty and may affect the organization (depending on the nature of the business and
product or service offering) are evaluated.
1. Economic Macro-environment
The economic macro- environment represents economic factors that can directly
affect an organization, Examples of these are inflation rate, foreign exchange rates,
consumer spending shifts, and consumer price index, among others. Economic factors
are significant because they indicate the cost of doing business as well as consumer
buying power.
An economic macro-environment factor may pose a threat to an industry, while
presenting an opportunity to another. The effect of the foreign exchange rate is different
on establishments that have large imported inputs in comparison to firms that rely on
purchases driven by foreign remittance.
2. Politico-legal Macro-environment
The politico-legal macro-environment includes both political and legal factors. A
highly uncertain political situation, such as an impending national election, may affect the
stability of businesses. A new administration may have different economic and monetary
priorities and may favor a divergent legislative agenda. Political unrest may lead to
government instability. This will always cause economic and business uncertainty.
Legal factors include laws passed recently, as well as legislative bills that could be
enacted into law. The effects of these should be in a company’s planning agenda. One
example is the recently approved legislation increasing tax exemption on the amount of
13th month pay of employees (Republic Act 10653, February 12, 2015). The exempted
amount translates into higher consumer spending at the end of 2015. This is highly
favorable for retailers. In contrast, the proposed legislation imposing a 10% ad valorem
tax on soft drinks and other sweetened beverages may result in the decline or flattening of
the demand for carbonated beverages, juices, and similar refreshments. Companies
belonging to these industries may consider product development and operational
alignment to lessen the effects of the law.
3. Sociocultural Macro-environment
Each geographical area has a specific culture that dictates how business is
conducted. Culture is defined as the beliefs, customs, arts, etc., of a particular society,
group, place, on time. Having been colonized by the Spaniards, Americans, and the
Japanese, the Filipino sociocultural macro-environment is far more challenging to
understand than that of its ASEAN neighbors. The most evident result of Philippine
colonial history is colonial mentality. All things being equal, Filipinos rend to prefer
products manufactured by certain countries (such as the United States, Japan, and some
countries of the European Union) over products manufactured locally.
Perhaps as a direct result of low wages and relatively high poverty incidence, some
Filipino families have to contend with providing for their needs and that of their families on
a daily basis. This has led to the necessity of the tingi or piecemeal retailing system.
Products that are needed on a small amount and on a daily basis, such as detergents,
shampoo, mobile phone credits, candies, and the like are sold individually in small
packets or sachets.
The Filipino trait of intrinsic closeness between mothers and daughter is exemplified
in the very personal concern exhibited by a Filipino mother towards her daughter’s
aesthetic dilemma in a popular skincare product culture-based television advertisement
introduced in 2002.
There are few sociocultural traits of Filipino that have been monitored and exploited
by companies doing business in the Philippines. Fortunately, the sociocultural
macro-environment is not as unpredictable as the economic and politico-legal
macro-environment. A country’s culture hardly changes over time, and may sometimes
require several generations to alter substantially.
4. Demographic Macro-environment
A company’s demographic macro-environment consists of changes in population
characteristics. These include population rate, gender, age, income composition patterns,
civil status, and family size. Population increase rates can be particularly beneficial for
mass marketing efforts. Positive shifts in gender and age composition patterns can be
utilized as opportunities for gender and age-specific products like sanitary napkins and
toys. The growing population with higher income presents opportunities for higher-priced
products. Increased family size can predict a higher demand for mini-vans and full-sized
vans, and lower demand for studio condominium units.
5. Technological Macro-environment
The technological macro-environment is composed of current and impending
technological change. This is sometimes the single factors that can cause the rapid
acceleration or bring about the untimely demise of products, services, or companies.
There are recent examples of this phenomenon. The development of electronic word
processing machines and computers with enhanced features have launched Apple
Microsoft, etc. To the top of their industries. At the same time, popular typewriter brands
have disappeared from the market. Electronic mail has rendered snail mail, telegrams,
and the telefax practically obsolete. Digital photography has made photograpic films less
popular. Social media platforms, such as Facebook, Twitter, and Instagram, have
decreased the popularity of traditional media. The multi-tasking features of smartphones
have dethroned the still reliable basic feature phones as devices of choice.
The changes in the technological macro-environment can be threatening. Properly
channeled, they can be opportunity springboards for future successes.
6. Natural Macro-environment
The natural macro-environment refers to natural resource inputs and environmental
concerns. Uncontrolled use of finite natural resources including fossil fuel in
organizational activities has heightened concern for the sustainability of the rampant
denudation of forests. Although legislation is in place, the preservation of the natural
environment is a major factor to consider in a company’s activities.
An analysis of the natural environment must also include calamities, often referred to
as “acts of God”. These include floods, earthquakes, tornadoes, landslides, tropical
cyclones, volcanic eruptions, and storm surges. Specific geographical areas of the world
are particularly susceptible to these calamities (e.g. earthquake-prone countries located
in the so-called “ring of fire”). Businesses operating in these areas can expect frequent
operational disruptions. On the other hand, opportunities also abound in these localities.
There could be a higher demand for flashlights, power generating units, medical survival
kits, and other goods needed for frequent emergencies.
Identifying Opportunities and Threats
After relevant economic, politico-legal, sociocultural, demographic, technological,
and natural macro-environmental factors have been identified and analyzed, the company
shall now proceed to identify threats or opportunities among these factors.
Although both opportunities and threats are external in nature and essentially
uncontrollable, opportunities are favorable to a company and, therefore, can be
capitalized on, while threats are unfavorable and require mitigation.
For example, a company can take advantage of the increased economic growth in
the Visayas by developing the market through the opening of outlets in the region.
Through product development, a fruit juices manufacturer can develop a healthy line of
beverages to minimize or avoid the potential threat of increased tax on its current
products.
What’s More
Activity 3- Strategic Marketing Process
Direction: Present the “Strategic Marketing Process” by creating a flow chart. Write each
of the step in bold letters and write for the definition per step.
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
___________________________
Activity 4- Tactical Marketing Process
Direction: Complete the diagram below and explain the process.
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
______________
Activity 5: Follow Through
Direction: Write A if it is marketing micro-environment and B, if it is marketing
macro-environment. Write your answer on the space provided before the
number.
___________1. Suppliers
___________ 2. Sociocultural
___________ 3. Demographic
___________ 4. Technological
___________ 5. Public’s
____________ 6. Politico-legal
____________ 7. Market Intermediaries
____________ 8. The company
____________ 9. Competition
____________ 10. Customers
What I Have Learned
Activity 6: Reflection
Direction: Answer the following
1. Is it possible with no distinct differentiating feature to be successful in the market?
Give examples and explain briefly.
_______________________________________________________________
_______________________________________________________________
______________________________________________________________
2. Some companies market their products without first identifying their target market.
After several months of operation, they profile their customers and classify them
geographically, demographically and psycho-graphically. The most recurring
profile of customers is identified as the “target market” is this workable?
Explain briefly.
_______________________________________________________________
_______________________________________________________________
______________________________________________________________
Post Test
Direction: From the Pool of word;s inside the box, choose the opproapriate term for each
description below.
Economic
Cost leadership
Politico-legal
Company
Liquidation Forward integration
Market development
Technological
Competition Natural
Suppliers
Customers Demographic
Refenchment
Unrelated diversification
1. This involves gaining ownership or increased control over distributors or retailers.
2. This is a strategy primarily for achieving low cost leadership among industry competition
3. This involves selling all of a company’s assets, in parts or as a whole, for their tangible
worth.
4. It provide raw materials, utilities, labor, capital, and equipment in marketing
micro-environment.
5. Its part of the marketing micro-environment that creates the demand for products and
services.
6. This involves or reversing declining sales and profits through cost or asset reduction.
7. This strategy involves the introduction of existing products or services into a new
geographical area or market.
8. This involves introducing new but unrelated products or services.
9. Is a marketing may be the lifeblood of an organization, but it cannot exist independently of
other organizational functions.
10. Is the demand for a company’s products and services is affected by the nature and
intensity of competion.
11. It represents economic factors that can directly affect an organization.
12. It consists of changes in population characteristics.
13. It refers to natural resources inputs and environmental concerns.
14. It composed of current and impending technological change.
15. It includes both political and legal factors of marketing.
Answer Key
Lesson 3
Define Marketing Research, Its importance to a Business
Enterprise and Identify the Steps in Marketing Research
(ABM_PM11-le-1-11)
What I Need To Know
Marketing research is the function responsible for acquiring and evaluating market and
consumer-based information for decision making and the determination of marketing strategic
direction. It is primarily responsible for the gathering, analysis, and timely distribution of
information for the use of marketing decision makers.
General Abjectives:
After going through, you are expected to:
 Define marketing research and its importance to a business enterprise; and
 Identify the steps in marketing research
What’s In
Activity 1:
Check your understanding about the Marketing Research:
1. Caroline started doing her marketing research process by Identifying the problem
of poor marketing message penetration. What does Caroline need to articulate
next? Choose your answer below and Explain briefly
a. Develop the research plan
b. Objectives for the research
c. Conduct research
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
__________________
What Is It
MARKETING RESEARCH
Marketing research is a function under a business organization’s Marketing Information
System (MIS). MIS is primarily responsible for the gathering, analysis, and timely distribution
of information for the use of marketing decision makers.
Definition
Market research is the process of determining the viability of a new service or product
through research conducted directly with potential customers. Market research allows a
company to discover the target market and get opinions and other feedback from consumers
about their interest in the product or service.
The Purpose and Importance of Marketing Research
Companies have complete information about their products from production to distribution.
However, it is a challenge for the companies to know what happens to the product after it was
purchased. Who uses the product, how it is used, how much or how little of it used, and the
general attitudes of the consumer toward the product are not known explicitly. Thus, for new
products or new markets, the company may not be completely certain whether the product will
be accepted by the market. The value of the product to the consumer is difficult to measure
because perceptions of the value are subjective.
Although marketing research can be costly, it is indispensable. The following are some of
the issues that can be addressed by marketing research:
 Identify viable new products and services
 Enable risk reduction
 Identify market opportunities and threats
 Determine the level of customer satisfaction
 Pinpoint and anticipate market trends or changes
 Decide on the best advertising medium
 Pre-test and post-test advertising and promotional campaigns
 Evaluate the results of test marketing
 Evaluate the results of packaging, brand name, and label testing
 Determine consumer price awareness and sensitivity
 Undertake location studies
Steps in the Marketing Research Process
Marketing research can and should be used for various reasons. Marketing research can
be used to identify marketing opportunities and problems,generate and evaluate potential
marketing actions or plans, monitor marketing performance and improve marketing as a
process. But, how does one carry out marketing research? I delved into the Marketing
Research textbook by Alvin C. Burns and Ronald F. Bush for the answers.
Here are the 11 steps to conducting marketing research, but note that not all marketing
research follows these steps.
1. Establishing the need for marketing research
This could seem basic but is in fact fundamental to conducting marketing research.
Research takes time and money. Marketing research is not needed when information is readily
available (this could be through secondary data), when there is not enough time to conduct a
proper research study and answers are needed immediately, when you can afford the
research or when the costs outweigh the value.It could also simply be that the answer is
obvious.
2. Defining the problem
According to the authors, this is by far the most important step. If the problem is
incorrectly defined, all is wasted effort. Marketing research should only be conducted
to answer a problem. There are also needs to be alternatives. If there are no alternatives, no
decision is necessary.
3. Establishing research objectives
Objectives tell a researcher exactly what he or she should be looking for and what he or
she must do to obtain the information necessary to allow the manager to choose between the
decision and the alternatives.
4. Determining research design
 Exploratory research: informal search to learn more about the research problem, learn
terms and definitions or identify opportunities
 Descriptive research: most basic; used to describe the marketing phenomena
 Causal research: uncover factors that cause on event
5. Identifying information types and sources
 Primary: information collected specifically for the problem at hand
 Secondary: information already collected
6. Determining methods of accessing data
This can be done through observing consumers, surveys, online etc.
7. Designing data collection forms
Designing the form in which data will be collected. It can be a questionnaire or an
observation form.
8. Determining sample plan and size
Sample plan: describes how each sample element is to be drawn from the total population
Sample size: how many elements of the population should be used to make up the sample
9. Collecting data
Non-sampling errors in data are likely to occur and researchers need to know the sources
of these errors to implement controls to minimize them.
10. Analyzing data
Data analysis involves entering data into computer files, inspecting data for errors, and
running tabulations and various statistical tests.
11. Preparing and presenting the final report
It is important that it is not overstated as it is the report that properly communicates the
results to the client.
Making Marketing Research-based Decisions
Marketing research reports include a lot of information that can aid organizations in
making effective marketing decisions, rather than resorting to unsupported “gut feel”decisions.
Some examples of reports and the marketing decisions they can support are:
 External factors research- The information from these researches helps marketers
identify macro-environmental shifts. These are bases in pinpointing opportunities and
anticipating threats.
 Observation research - This is an invaluable aid in determining consumer behavior.
It assists marketers in determining the retail shelf placement strategy to use. It also
reveals the effectiveness of point-of-purchase collateral materials.
 Test marketing- Based on test marketing results, the company shall gauge the
acceptability of a proposed product/service. The company can, have the opportunity






to re-calibrate elements in the marketing mix and to measure their effects on
consumer demand and overall satisfaction. Its finding can result in the
discontinuance of a proposed product/service if results indicate a general lack of
interest.
Target market studies- These help identify, quantify, and understand the target
market better. Companies may decide to redefine its target market by including
characteristics the market should possess
Concept, product development, and product studies- Using the results
generated by concept, product development, and product studies, marketing
organizations shall select the proposed product/service concepts that have the
highest level of market acceptance. It can also be used to decide on the packaging,
to determine the market acceptance. It can also be used to decide on the packaging,
to determine the market reaction, and to justify brand positioning.
Pricing tests- Pricing tests can be utilized by marketers to calculate a product’s or
service’s optimal price, to determine price elasticity, or to determine how price
adjustment can effect total demand for the product or service.
Location studies- Location studies determine ideal retail store locations and is a
valuable tool in site selection.
Advertising pre- and post-testing- These tests can determine advertising copy
effectiveness, advertising recall, sales promotion response rates, outdoor advertising
traffic results, and the effectiveness of public relations media placement. A
product’s/service’s advertising theme or message and the mechanics of consumer
sales promotions can be adjusted based on these results.
Usage,attitude, and image studies- These studies can provide cost- effective ways
on how to increase a product’s/ service’s awareness level and brand trial. In addition,
the results can reveal product usage and allow the company to develop strategies to
increase usage frequency. The effectiveness of current distribution outlets can be
ascertained. This can help in determining if distribution outlets can be ascertained.
This can help in determining if distribution should be expanded or alternate
distribution outlets should be developed. Finally, product/service purchase drivers
can be quantified to calibrate its value offer effectively
What’s More
Activity 2: Multiple Choice
Directions: Circle the correct answer
1. Clearly communicate the research findings to the client.
a. 5. Identify Information Types and Sources
b. 6. Determine Methods of Accessing Data
c. 1. Establish need for marketing research
d. 11. Prepare and Present the Final Research Report
2. Research objectives tell the researcher exactly what information needs to be
gathered and analyzed to allow managers to make decisions related to a
problem. They need to be clear and measurable.
a. 4. Determine Research Design
b. 1. Establish the need for Marketing Research
c. 5. Identify Information Types and Sources
d. 3. Establish Research Objectives
3. You don’t need MR if:
- The information is already available
- The timing is wrong to conduct MR
- Costs outweigh the value of MR
a. 3. Establish Research Objectives
b. 6. Determine Methods of Accessing Data
c. 5. Identify Information Types and Sources
d. 1. Establish the need for making Research
4. Can be found online, using surveys, or observing customers
a. 2. Define the Problem
b. 6. Determine Methods of Accessing Data
c. 4. Determine Research Design
d. 11. Prepare and Present the final Research Report
Activity 3: True or False
Directions: Write TRUE if the sentence is correct and right FALSE is not correct.
1. Using IBM or SPSS, data analysis is to use statistical tools to present data in a
form that full fills the research objectives - 1. Establish the need for Marketing
Research
____________
2. Primary Information: collected specifically for the problem at hand
Secondary: information already collected (always look at first)- 1. Establish the
need of marketing research
____________
3. Define a Problem Statement that summarize the problem briefly - 6. Determine
Methods of Accessing Data
____________
What I Have Learned
Activity 4: Reflection:
1. Why is marketing research important for business owners?
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________
2. In what ways can marketing research help you as a consumer? Explain
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
____________________________________________.
What I Can Do
Activity 5: Newspaper Research
Directions: You may look for a newspaper articles pertaining to an actual marketing
research done in the Philippines. Paste the articles inside the box and answer the
following questions below.
1. What was their research about?
___________________________________________________________________
______________________________________________________________________
______________________________________________________________________
____________________________________________________________
2. Why was this marketing research made? What were its goals and objectives?
___________________________________________________________________
______________________________________________________________________
______________________________________________________________________
_______________________________________________________
3. What were the outcomes of their research?
___________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
_____________________
4. Do you think their research was successful based on how they achieved their goals
and objectives? Explain shortly
___________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________
ANSWER KEY
Activity 1: Answers may vary
Activity 2:
1. 11. Prepare and Present the Final Research Report
2. 3. Establish Research Objectives
3. 1. Establish the need for Marketing Research
4. 6. Determine Methods of Accessing Data
Activity 3:
1. False
2. False
3. False
Activity 4: Answers may vary
Activity 5: Answers may vary
References
Senior HIgh School Textbook:
Principles of Marketing Author: Real C. So and Oscar G. Torres; Editor: Angeles A. De
Guzman, DBA (pp. 35-55)
https://courses.lumenlearning.com/suny-marketing-spring2016/chapter/reading-themarketing-research-process/
https://www.investopedia.com/terms/m/market-research.asp#:~:text=Market%20research
%20is%20the%20process,in%20the%20product%20or%20service.
If you are interested in Marketing Research, I strongly recommend the book, Marketing
Research, Alvin C. Burns and Ronald F. Bush, available on Amazon. It comprises the right
amount of detail. The 11 steps detailed above are well-define and described in the book.
Source: Marketing Research, Alvin C. Burns and Ronald F. Bush
http://festa-marketing.blogspot.com/2013/12/11-steps-to-conducting-marketing.html
Lesson 4
Differentiate the buying Behavior and Decision Making of
individual/household customer versus the Business (organizational)
customer
(ABM_PM11-le-i-13)
What I Need To Know
At the end of the lesson, you are expected to:
 Describe consumer and business markets; and
 Differentiate the buying behavior and decision making of individual/household
customer versus the business (organizational) customer.
What’s New
Activity 1: Research of a companies that are part of organizational markets and explain only
What purpose and operationg of these markets? And Research also a picture of consumers and
explain why consumer purchase products and services? After that you are going to determine at least
one similarity and differences between consumers and organizational markets.
_______________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
________________________________________________________.
What Is It
Consumer and Organizational Markets
Business offer products and services to both consumer and organizational markets.
Consumer Markets
Consumer markets include individuals and/or households that purchase products and services
for personal consumption. Consumers normally make purchase in smaller quantities, due to their
tendency to consume products gradually over a period of time. Moreover, consumers tend to be
more emotional about their purchases. The purchases are at times impulsive or spontaneous.
Differentiate the buying Behavior and Decision Making of individual/household customer versus
the Business (organizational) customer
The customer buying process (also called a buying decision process) describes the journey your
customer goes through before they buy your product. Understanding your customer’s buying process
is not only very important for your salespeople, it will also enable you to align your sales strategy
accordingly.
The five stages framework remains a good way to evaluate the customer’s buying process. John
Dewey first introduced the following five stages in 1910:
1. Problem/need recognition
This is often identified as the first and most important step in the customer’s decision process. A
purchase cannot take place without the recognition of the need. The need may have been triggered
by internal stimuli (such as hunger or thirst) or external stimuli (such as advertising or word of
mouth).
2. Information search
Having recognized a problem or need, the next step a customer may take is the information
search stage, in order to find out what they feel is the best solution. This is the buyer’s effort to
search internal and external business environments, in order to identify and evaluate information
sources related to the central buying decision. Your customer may rely on print, visual, online media
or word of mouth for obtaining information.
3. Evaluation of alternatives
As you might expect, individuals will evaluate different products or brands at this stage on the
basis of alternative product attributes – those which have the ability to deliver the benefits the
customer is seeking. A factor that heavily influences this stage is the customer’s attitude. Involvement
is another factor that influences the evaluation process. For example, if the customer’s attitude is
positive and involvement is high, then they will evaluate a number of companies or brands; but if it is
low, only one company or brand will be evaluated.
4. Purchase decision
The penultimate stage is where the purchase takes place. Philip Kotler (2009) states that the
final purchase decision may be ‘disrupted’ by two factors: negative feedback from other customers
and the level of motivation to accept the feedback. For example, having gone through the previous
three stages, a customer chooses to buy a new telescope. However, because his very good friend, a
keen astronomer, gives him negative feedback, he will then be bound to change his preference.
Furthermore, the decision may be disrupted due to unforeseen situations such as a sudden job loss or
relocation.
5. Post-purchase behaviour
In brief, customers will compare products with their previous expectations and will be either
satisfied or dissatisfied. Therefore, these stages are critical in retaining customers. This can greatly
affect the decision process for similar purchases from the same company in the future, having a
knock-on effect at the information search stage and evaluation of alternatives stage. If your customer
is satisfied, this will result in brand loyalty, and the Information search and Evaluation of alternative
stages will often be fast-tracked or skipped altogether.
On the basis of being either satisfied or dissatisfied, it is common for customers to distribute
their positive or negative feedback about the product. This may be through reviews on website, social
media networks or word of mouth. Companies should be very careful to create positive post-purchase
communication, in order to engage customers and make the process as efficient as possible.
Consumer Buying Roles
There are five roles individuals may portray in a consumer buying decision:





Initiator- person who initially suggests buying a particular product or service.
Influencer- person who tries to convince others of the need for the product/service
and influences the purchase decision.
Decider- the person who makes the final decision to purchase or makes the final
decision on any product/service components such as what to buy, how to buy, where
you buy, etc.
Buyer- the person who makes the actual purchase.
User- the person who actually uses the products/service whether or not he/she was
involved in the buying decision.
As an example, the wife in a family may suggest to her husband that since their eldest son is
about to start working, it may be time for him to have his own car. In this case, the wife is the initiator.
The younger son agrees with the suggestion and informs his parents of make, model, and color. Both
the younger son and elder sister are influencers. The father may visit several car showrooms, until he
eventually decides on the purchase and pays for the car. The father is the both the decider and the
buyer. The eldest son receives the car ans uses it as his personal vehicle. He is the user.
Consumer Markets and Buying Behavior
Consumers are of different genders and ages. They have varying income levels, live in different
regions of the country, and have various personalities and psychological profiles. This makes
developing a single way to sell to consumers. Difficult as they are influenced by different factors when
buying goods and services.
Consumers’ purchases are initiated by marketing stimuli. Marketing stimuli refer to the
elements of the marketing mix, oftentimes referred to as the 4P’s: Product, Price, Place, and
Promotion. Consumers are influenced by the products/services that they see, hear from mass media,
the Internet, and through word of mouth. Marketing organizations organize these four elements so
marketing stimuli can result in experted sales and brand loyalty.
Figure 9. The
Consumer
Behavior Model
Buyer characteristics comprise of cultural, social, personal, and psychological factors. Cultural
characteristics, particularly, play a large role in consumer interest and eventual purchase. Products
and services must “fit” the cultural background of the potential buyer and not run contrary to it. An
individual’s personal culture is developed overtime. This includes his manner of upbringing, his
educational background, and the collective culture consciousness” or “ keeping up with the Joneses”
will favorably influence an individual’s attraction toward products and services with prestigious brand
reputations. A consumer, therefore, may be drawn to an advertisement of a high-end model but may
selectively ignore advertisements of a high-end model but may selectively ignore advertisements of
other lesser known brands that he perceives are relatively inferior or does not promote his culture of
brand consciousness.
Sub-cultural factors are minute parts of one’s culture that provide specific identification of its
members. This can include one’s nationality mix (e.g. Tsinoy, Mestizo, Fil-Am) or regional origins (e.g.
Ilocano, Batangueño, Ilonggo, or Manileño). These factors play a critical role in one’s buying behavior.
For example, Chinese-Filipinos are supposedly very practical in their spending habits, and Ilocanos
have been know to be thrifty.
This behavior may likewise be influenced by one’s social class. Social class is a status heirarchy in
which individuals and groups are classified through economic success and accumulation of wealth.
The four most common social classes are upper class, middle class, working class, and lower class.
Commonly, consumers belonging to a particular economic class (such as class A, the highest
economic class), purchase products and services consistent with their economic status. An income
class A senior corporate executive may therefore drive or be driven in an expensive car, wear branded
clothes, own a high-end smart phone, dine in the finest restaurants, and speak and act in a restrained,
measured, and socially eloquent manner. In cases of this nature, this person’s income classification is
consistent with his/her social class (income class A= upper social class).
Consumers usually purchase products and services befitting what they perceive as “acceptable”
by their own social class. Purchases made outside this “acceptable” classification can lead to one
being openly or silently ostracized by other members of their social class.
Therefore, if this senior executive suddenly decides to purchase a 15-year old obviously
dilapidated car and decides to begin driving it personally to and from work, he may raise many of this
office mates and acquaintances eyebrows as “acting outside his social class” or may even be
suspected of having lost his previously enviable economic status.
Conversely, if one of this senior executive’s lowest ranking employees belonging to the lowest
income classes (classes D and E), invests all his pay, maximizes his credit, purchasing and coming to
work consistently in branded clothes, communicates with others higher ranking, substantially
wealthier office-mates and otherwise exhibits the purchasing his true economic standing will frown
upon this behavior as spending beyond one’s means, and may even brand him as a “social climber.”
Reference groups, likewise, exert a strong influence on buyer behavior. Reference groups
include individuals or groups that influence consumer opinions, beliefs, attitude, and behaviors. They
often serve as role models and inspiration. Many consumers belong to reference groups such as
families, friends, schoolmates, and co-workers. These are people whom they have extended and
intimate contact with. These groups exert continuous influence on an individual’s choice of
products/services or brands to purchase.
On the other hand, aspirational groups are groups that a person currently does not belong to but
wishes to belong to or to be associated with. What aspirational groups purchase also influences and
individual considerably, as he may feel that buying products/services and brands make him feel some
degree of belongingness to the aspirational group:
The challenge to marketers with reference and aspirational groups is to identify the leaders of
these groups and to shape their opinions that influence their followers in favor of a product or service.
Sometimes, product or service. Sometimes, products advertisers produce aspirational ads to appeal
to customers’ desire to be affiliated with a particular group.
An even stronger influence on buyer behavior is the family. This phenomenon is particularly true
among Filipinos. Because of the length of time one spends with his family, an individual adopts the
values, habits, and philosophical orientation of his family, i.e. self-worth, spending habits, and general
perspective and outlook towards life. This continues even after he has married. Spouses exert varying
levels of influence in the purchase of goods/services so marketers must be able to identify the
decision-maker in the relationship. In the Philippines, the wife is often the decision-maker in the
purchase of daily household items, while the husband exerts a greater influence in the purchase of
large ticket items such as durable and specialty goods.
Each individual performs a particular role in relation to his environment. This role is related to
his occupation or profession. His buying decisions shall befit the image or status that he projects. For
example, a vice-president of a company is expected to drive a luxury car and wear high-end clothing,
and to be seen frequenting prestigious commercial establishments.
Figure 10. Buyer
Characteristics
Influencing Purchase
Behavior (Source: stock
photo
An individual’s personal factors also play a sizeable influence in his buying behavior. People’s
need and wants change as one ages-- from toys in early childhood, to denim pants as teenager, to
suits and dress clothes as one joins the workforce. A very useful guide to buying prospensity was
developed by William D. Wells and George Gubar-- the nine stages of a family’s life cycle. The
authors have modified it to fit to the Philippine context.
Stage 1: Bachelor/bachelorette stage- They are highly dependent on their parents for finances
in the form of allowances. Some may be employed part-time in fast food chains or business
out sourcing companies. They spend primarily on entertainment, eating out, fashion, dating,
and activities with friends.
Stage 2: Young, newly married couple with no children- Most have dual income as both spouses
may be working. They may be renting a house or temporarily staying with parent/in-law.
They buy household appliances and audio and video equipment, and spend to make their
living space comfortable. If living with parent/in-law, they may share in household
expenses.
Stage 3: Married couple, with eldest child below elementary school age- They may be renting
their living facility or still staying with parent/in-law. They spend their income on nursery
and kindergarten education, food, children’s clothes, juvenile furniture, toys, and trips to
amusement parks.
Stage 4: Married couple, with youngest child six years old or over- They spend primarily on
school tuition, uniforms, books, and allowances. They usually live independently in an
apartment or condominium. They may join social and civic clubs and begin investing in
insurance. They purchase groceries and food items frequently and in larger quantities.
Stage 5: Older married couple, family head still working, all children living on their own- They
have increased savings as a result of reduced financial requirements. Their expenditures
include vacations, some luxury items, health and fitness, vitamins and supplements. They
initiate retirement fund investments.
Stage 6: Widow/widower, in labor force - They have substantial savings. They may move out
from a conventional home to live in a small condominium unit. They spend on eating out,
movies, other forms of entertainment, health and fitness, and dietary supplement. Also,
they spend a lot of free time with friends who share similar lifestyles.
Stage 7: Widow/widower, retired - Pensioner. They may be asked to move in by one of their
adult children for better care. Substantial expenses are for ambulatory and healthcare,
usually with host child’s family.
An individual’s occupation also plays an important indicator in the products and services
he/she purchases. Lawyers are expected to buy a lot of dress shirts, neckties, suits or barong tagalogs.
Blue collar workers purchase work purchase work boots and denims, while students regularly buy
school supplies such as pens, paper, and notebooks.
Buyer behavior is also dictated by economic capability. It is evident that individuals need money
to purchase goods and services. The more money available, the greater the amount and quantity of
purchase.
Lifestyle is defined as a manner of living that reflects a person’s values and attitudes. One’s
lifestyle is independent of his/her occupation, social class, or status. Therefore, a person may occupy
a high position in a bank, and yet prefer to maintain a frugal lifestyle. In contrast, an entry-level teller
in the same bank may live an extravagant lifestyle: always eating out, buying branded clothes, and
using the latest communication gadget.
Personality refers to individual differences in characteristics patterns of thinking, feeling, and
behaving. Typical personality traits are dominance, deference, defensiveness, adaptability, autonomy,
sociability, and self-confidence. The individual personalities of consumers likewise influence their
buying behavior. Marketers can use personality as a means of enhancing product. For example, a car
manufacturer may discover that most buyers of its brand are self-confident and highly sociable. The
car company can then proceed to compose advertising copy or advertising messages that appeal to
these personality types in marketing its cars.
Similar to psychological factors, motivation addresses the issue of why a consumer buys a
product or what needs he is trying to satisfy. Most individuals purchase products and services in order
to satisfy one or more of the five need levels identified by Abraham Maslow.
Figure 11. Abraham
Maslow’s Hierarchy
of Needs (Source:
stock photo)
For example, three friends decide to meet and dine in a restaurant. One of the three may look
forward to the event because it will strengthen her relationship with her friends. She is satisfying her
social needs. Another may anticipate the event as she wants to take advantage of the occasion to
make an emergency loan from one of her friends. In this case, she is satisfying her safety or security
needs. The third may actually just want to attend the occasion because she has heard the food in the
restaurant is particularly good. She is attending the affair to satisfy her physiological needs.
Perception is the process by which people translate sensory impression into a coherent and
unified view of the world around them. Because of perception, consumers may view marketing
stimuli in different ways. Although a housewife may have been motivated to buy a pair of shoes for an
important occasion, she may have a negative perception of the level of service in a shoe store. She
may judge the efforts of an extremely motivated salesperson as being “too pushy.” She may just
prefer to just ask for assistance when necessary. Another consumer in another shoe store that gives
shoppers “space” to browse may perceive the store as totally lacking in customer service and
concern.
Three perceptual processes guide an individual’s perception:
 Selective attention - because consumers are exposed to hundreds of commercial messages
each day, they tend to pay attention to only those that address a current need. This is the
reason why therefore meal time, consumers are selectively attracted to food commercials,
but almost totally ignore them when their hunger has been satisfied. This is also why
companies develop advertisements that’s stand out and are different from other firms.
They may, for example, use black and white as their medium to set their advertisement
apart, or use extreme dramatization in their messages.
 Selective distortion - pertains to the tendency of individuals to twist or “distort”
information to fit their existing mindset toward a brand. A first time customer in a
restaurant with excellent market reputation may, for example, “twist” or rationalize the
unreasonably long time it takes for his order to arrive. He may convince himself that the
chef is taking extra care in selecting the ingredients and preparing his order. In reality,
however, the delay could simply have been caused by the order being overlooked by the
kitchen staff.
 Selective retention - means that consumers tend to remember only the positive things that
reinforce their attitudes and beliefs. Therefore, a shopper in a supermarket may only
remember the wide product selection, affordable prices, and relaxing shopping atmosphere
and totally “forget” the spill he had seen at the meat section, or the delay he
encountered at the checkout counter.
Learning is a relatively lasting change in behavior that is the result of experience. When a
consumer purchases a particular brand of product and is completely satisfied with it, his/her positive
experience with the brand is reinforced. This learning can easily be applied to another product of the
same brand. If a consumer purchases a particular brand of mayonnaise and is completely satisfied
with it, he may project the same positive experience to tomato sauce with the same brand. This is a
strong argument for building brand equity, so that consumers will view several, if not all, the products
under the brand favorably.
A belief is defined as confidence in the truth or existence of something not immediately
susceptible to rigorous proof. On the other hand, an attitude is a settled way of feeling about
someone or something, typically one that is reflected in a person’s behavior.
Consumers acquire both beliefs and attitudes through learning. Sometimes, consumers hold
strong beliefs about specific products or their qualities and attributes. Some of these beliefs may be
correct, some may be wrong. Correcting an erroneous belief can be expensive. This is also true with
attitudes.
For these reasons, organizations must study and understand various consumer beliefs and
attitudes regarding their product. One way of discovering consumer attitudes is through the conduct
of marketing research, particularly a usage, attitude, and image survey.
What role do beliefs and attitudes play in consumer marketing? Many of those who are regularly
do their own laundry believe that detergents that produce a lot of suds clean clothes better. This has
caused many households to reject new detergents in the market that do not produce a lot of suds. A
new detergent manufacturer, therefore, must either tailor his product to fit this belief or engage in a
massive campaign to correct or alter consumer attitudes.
The study of consumer buyer behavior is already complex. Cultural, social, personal, and
psychological characteristics all come into play. Some of these factors are largely uncontrollable.
What’s More
Activity 2: Explain in one pharagraph
A popular shampoo brand in the market is “Smooth and Fragrant Hair All Day” The brand
is positioned as a fragrance shampoo, curently a very desirable attribute to both men and
women. However, consumer preferences and priorities change over time. If, example, five
years from now, consumers give more importance to the ability of shampoo to make their hair
and shiny, how should “Smooth and Fragrant Hair All day” reposition itselt in the market?
______________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
_________________________.
Activity 3: Explain in one pharagraph
If you are going to visit a large supermarket and observe shoppers in the personal care or
toiletries section buying either toothpaste, soap, or shampoo. What do you observe of their
buying behavior and decision making process. Classify specific shopping behaviors with
certain population segments such as: men, women, teenage, middle-aged, elderly, wealthy,
middle-class, etc. And after that, you are going to document and evaluate their observations.
______________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
____________________________
What I Have Learned
Activity 4: Reflection
As a student;
1. What do you think is a good way to improve your buying behavior?
_______________________________________________________________
_______________________________________________________________
______________________________________________________________
2. Does impulse buying considered a negative consumer behavior? Giv some
instances and explain.
_______________________________________________________________
_______________________________________________________________
______________________________________________________________
Answer key
Activity 1
May vary
Activity 2:
May vary
Activity 3:
May vary
Activity 4:
May vary
By: Euan Johnston
Marketing Manager
Bellcom Worldwide
https://www.b2bmarketing.net/en-gb/resources/blog/5-steps-understanding-your-customers-buying
-process
Lesson 3
Lesson 5
Identify and Segment Market for Product or Service
(ABM_PM11-le-l-14)
Select the appropriate target market segment and its positioning
(ABM_PM11-le-I-15)
What I Need To Know
The learners are expected to:
 Identify and segment market for a product or service; and
 Select the appropriate target market segment and its positioning
What’s New
Activity 1:
Activity 1: Picture
The picture above are part of the organizational markets about theIR 3W purpose and operation
of these markets.List down the product what they want. And explain why you did not choose the
other product? five sentence only.
_______________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
___________________________________________________________________________________
What Is It
Market Segmentation
Market segmentation is the process of dividing a market of potential customers into groups, or
segments, based on different characteristics. The segments created are composed of consumers who
will respond similarly to marketing strategies and who share traits such as similar interests, needs, or
locations.
Whyismarketsegmentationimportantformarketers?
Market segmentation makes it easier for marketers to personalize their marketing campaigns.
By arranging their company ’ s target market into segmented groups, rather than targeting each
potential customer individually, marketers can be more efficient with their time, money, and other
resources than if they were targeting consumers on an individual level. Grouping similar consumers
together allows marketers to target specific audiences in a cost effective manner.
Market segmentation also reduces the risk of an unsuccessful or ineffective marketing campaign.
When marketers divide a market based on key characteristics and personalize their strategies based
on that information, there is a much higher chance of success than if they were to create a generic
campaign and try to implement it across all segments.
Marketers can also us segmentation to prioritize their target audiences. If segmentation shows that
some consumers would be more likely to buy a product than others, marketers can better allocate
their attention and resources.
Consumer Segmentation Variables
These are four major variables used in market segmentation:
1. Geographic- pertains to where the population is located. Geographic segmentation divides
the market by regions, cities, urban and rural area, coastal and central land masses, by density or
areas with low, medium or heavy concentration of population, or by areas of the country with either
relatively temperate or hot temperature, among others.
Some examples of geographic segmentation sub-variables are:
 Region
 Density
 Climate
2. Demographic - refers to the general characteristics of the population. Using demographic
segmentation, males may be grouped together in one segment, and females in another. Those
belonging to the higher income (income class A and B) may form a segment, the middle income class
(income class C) another segment, and the lower income (D and E) yet another. Age can also be an
effective segmentation variable. Teenagers may compose a segment, young adults another, and
mature individuals and senior citizens may form two more individual segments. Educational
attainment can be an effective segmentation sub-variable as well, such as those with higher
education (holders) of master’s degree, or doctorate degrees), individuals who have completed
their college education, graduated from high school, completed elementary education, and those
with little or no education.
Some examples of common demographic segmentation sub-variables are:
 Gender
 Age
 Income
 Occupation
 Education
 Civil status
 Religion
 Nationality
 Race
 Family size
3. Psychographic - these are variables that represent the psychological profile of consumers. This
is one of the most effective segmentation variables in predicting purchase behavior. However, the
psycho-graphic profiles of different segments of the population are difficult to measure as no
government agency undertakes regular studies and release data to identify and quantify these
segments. This is in contrast with geographic and demographic population data, which is collected
every five years by the Philippine Statistics Authority. Another is through Expectation Surveys
undertaken by several government agencies as the Bangko Sentral ng Pilipinas.
Examples of psycho-graphic segmentation sub-variables are:
 Lifestyle
 Personality
 Social Class
 User status
 Usage rate
 Loyalty status
 Benefits sought
4. Behavior-graphic - is the segmentation variable most indicative of purchase behavior.
Unfortunately, it is not available to all organizations as it depends on the meticulous maintenance and
conversation of internal databases. Retailer databases, for example, can provide information such as
customer listings, their home and email addresses, and contact numbers. When customer database is
organized and synchronized with point-of-sales system, retailers can pinpoint individual customer
purchases, by item, transaction size, time of day, and frequency. When the database of a particular
female customer, for example, indicates a preference for capri pants, the retailer can send an email to
this customer to advise her of the arrival of new capri pants. Without the database, the email will be
sent to all of the retailer’s customers. Behavior-graphic segmentation not only enhances the
likelihood of sales, but dramatically reduces direct marketing costs.
The organization has to decide which segmentation sub-variables are relevant to the successful
and cost-efficient marketing of its product or service. For example, a fruit juices company may decide
to concentrate the marketing of its products to teenagers from the middle class income bracket. It
may also decide not to segment its potential consumers by education, as educational attainment may
be irrelevant in fruit juices purchase and consumption.
Target Market
After segmenting the market into various homogeneous parts (or segments possessing similar
characteristics), the marketer decide which parts/segments he/she wants to actively pursue. The
target market of a product or service is defined as its most probable and most logical consumers, and
may likewise be its heaviest consumers. A company may, for example, decide its product’s target
market to be:
“Males and females residing in Metro Manila who belong to income classes A, B and C, single,
are between the ages of 21 to 30, who are sports-minded and are looking for a sports drink that can
provide relief after strenuous physical activities.”
Research into national statistical database (e.g. the Philippines Statistics Authority) shows the
following population profile:
Figure 13. Population Statistic
By gender:
Male
Female
Metro Manila Population
49.3%
50.7%
By income class:
Class AB
21.2%
Class C
41.3%
Class D
22.4%
Class E
15.1%
11,278,564
By marital status:
Single
31.1%
Married
46.2%
Separated/Widow/Widower 22.7%
By age:
Below 10
14.8%
10 to 20
21.4%
21 to 30
19.7%
31 to 40
17.9%
41 to 50
11.7%
51 to 60
8.4%
Above 60
6.1%
Elements of an Ideal Target Market
A company may finalize the selection of its market upon consideration of its conformity with the
following elements:
 Substantial - the select target market must be large enough in terms of quantity and/or total
consumption capability. The size of a target market can be determined as follows:
Target market: Males and females residing in Metro Manila who belong to income classes A,B,
and C, single, are between the ages of 21 to 30, who are sports-minded and are looking for a sports
drink that can provide relief after heavy physical activity.
x
1.00
x
0.625
x
0.311
x
0.197
431,877
11, 278, 564
(Metro Manila Population)
(decimal equivalent of the percentage of the population who are
male and female)
(decimal equivalent of the percentage of the population who
belong to income classes A,B, and C)
(decimal equivalent of the percentage of the population who are
single)
(decimal equivalent of the percentage of the population who are
between the ages 21 to 31)
Target market size
Although psychographic segmentation sub-variables (such as being sports-minded, or those
engaged in heavy physical activity) may be the most indicative in determining potential consumption,
no database on these factors are available in public database. In most cases, organizations may have
to conduct market research to determine the percentage of the total population processing these
psychographic characteristics.
After the total size of the target market is determined (in this case 431.877), the organization
then decides on the substantiveness of the total market. If the organization feels the size is sufficient
to generate substantial sales revenues to make a profit, the company can proceed to market its
product/service offering.
If, however, the organization feels that the target market is not substantial enough to generate
sufficient revenues, the organization can either:
A. Expand its target market to include other segment brackets previously not targeted
The company may decide to not just target ages 21 to 30 but likewise include ages 31 to 40. This
will result in a larger target market, as follows:
11,278,564
(Metro Manila Population)
x
1.00
x
0.625
x
0.311
x
0.376
(decimal equivalent of the percentage of the
are male and female)
(decimal equivalent of the percentage of the
belong to income classes A,B, and C)
(decimal equivalent of the percentage of the
are single)
(decimal equivalent of the percentage of the
are between the ages 21 to 30 and 31 to 40)
Target market size
824,294
population who
population who
population who
population who
B. Expand its target market by reducing the number of sub-variables
The company may decide to exclude civil status as a segmentation sub-variable by targeting all
men and women regardless of marital status. The resulting target market size is as follows:
x
1.00
x
0.625
x
0.376
11,278,564
2,650,463
(Metro Manila Population)
(decimal equivalent of the percentage of the population who
are made and female)
(decimal equivalent of the percentage of the population who
belong to income classes A,B, and C)
(decimal equivalent of the percentage of the population who
are between the ages 21 to 30 and 31 to 40)
Target market size
C. Combination of the two options
The company may decide not to use civil status as a segmentation sub-variable. It may expand
its target market to include ages 31 to 40. The resulting target market size is as follows:
x
1.00
x
0.625
x
0.376
2.650,463
11,278,564
(Metro Manila Population)
(decimal equivalent of the percentage of the population who
are male and female)
(decimal equivalent of the percentage of the population who
belong to income classes A,B, and C)
(decimal equivalent of the percentage of the population who
are between the ages 21 to 30 and 31 to 40)
Target market size
However, expanding one’s target requires necessary adjustments in the elements of the
product’s or service’s marketing mix. For example, extending the original target market from
income classes A and B to include income class C would require adjustments in its suggested retail
price, an expansion of its distribution network, and a possible re-calibration in the details of its
intended advertising and promotions plan.
In market segmentation, the more segmentation sub-variables are used, the smaller the target
market becomes. This results in a focused market, where the market may feel that the product has
been made exclusively for me. Inversely, the less segmentation sub-variables are used, the larger the
target market becomes.
The target market should ideally be:
 Financially capable - must have the financial means to afford means to afford the purchase
price of the product/service. Since organizations require a selling price for their
product/service, financial capability is an essential element of an ideal target market. For


this reason, most profit-oriented organizations exclude income class E as part of their
target market.
Reachable - must be within physical reach to permit product distribution. It should also
reachable by various marketing activities (advertising, promotions, Internet and digital
marketing, etc.)
Homogeneous - must react similarly to specific marketing stimuli. A homogeneous market
is an ideal target market. Since companies employ various marketing stimuli to attract,
persuade, or retain the loyalty of its target market, homogeneous markets will ensure that
the marketing activities will be efficient and effective.
Target Market vs. Consuming Market
How does a product’s target market differ from its consuming market? A company’s target
market is the group of individuals with specific characteristic to whom the company has decided to
focus its marketing efforts. For example, a fruit juices brand may have identified its target market to
be “males and females residing in major urban centers nationwide, who are between the ages of 12
and 25, belonging to income classes A,B and C who are looking for a carbonated beverage with a high
caffeine content that can reinvigorate them and keep them active enough to perform their daily
activities.” Individuals who fit this description is the brand’s target market.
On the other hand, the consuming market comprise of actual consumers of the product/service.
The great majority of its consuming market would naturally come from their selected target market.
However, some individuals outside the product’s target market description (above the age of 25, for
example) may also buy the fruit juices brand and may also find its value proposition applicable to
them (although to a lesser extent). A product’s or service’s consuming market, therefore, is larger
than its target market, because it includes individuals that are not target market of the
product/service.
Positioning
Positioning is the process of communicating the image of a brand into the minds of consumers.
The objective is to make the brand stand out in comparison to its competitors.
Why should a brand have an image or a brand position? The first reason is to recall. Customers
have difficulty remembering brand position? The first reason is to recall. Customers have difficulty
remembering brands that have no distinct image. This can be illustrated using a typical high school
student attending a reunion of his elementary graduating class. Upon seeing his former schoolmates,
he may remember some schoolmates immediately, some even by name. These schoolmates are
memorable because of some distinct image they had when they were together in primary school: the
most intelligent, the neatest, the cutest, the tallest, the darkest, the funniest, etc. He may struggle to
remember the names of the majority of his schoolmates because they were just “faces in the
class,” little known for anything in particular.
The same holds true with customers. When a customer needs a particular product or service, he
will only include in his/her mental list of possible brands to purchase. Those brands that he
remembers and recalls. The customer will exclude other brands that have not established their
position in his memory.
Having a catchy brand
name is good strategy
for branding
Elements of Good Brand Position
What is a good brand position? These are three requirements:
 Unique - A brand must select a position that is not currently occupied by another brand.
For example, it would not be good for a new bank to position itself as a full service financial
institution that is willing to go out of its way to satisfy customer needs and adopt other
bank’s tagline. The new bank must identify its own distinctive features and communicate
them to its customers using a different tagline
 Beneficial - The selected position must be perceived by its customers as beneficial
Customers always ask when considering a product or service, “what in it for me?” They
are willing to patronize market offerings that they perceive as capable of satisfying their
needs and/or wants. Hence, if a commercial bank that is slow in processing transactions.
 Credible - Once a brand position is selected, it must ensure that it performs and fulfills the
promise of its position. If a retailer positions itself as customer-friendly and communicates
this through the tagline “service with a smile,” the organization must ensure that this
positioning is implemented 100% of the time for it to be credible, perhaps requiring
employees to smile all the time when dealing with customers.
Selecting a Good Brand Position
There are several tools available that can be used in the selection of a good brand position. One
of the most powerful of these tools is perceptual mapping.
Perceptual Mapping
Perceptual mapping involves the identification of a competitive brand’s position using two
variables or axes (for example, price and quality). Each variable represents a factor relevant and
important to customers. Using perceptual maps, new products launched into the market can select
the position they wish to occupy. This is after a comprehensive assessment of the number, size, and
intensity of competition in each quadrant of the map.
For existing brands,
perceptual mapping is
useful in identifying
industry participants
perceived by customers to
be the brand’s most direct
competitor’s
Communicating Brand Position
The brand position of a product/service must be consistent and communicated effectively to its
target market. It is pointless to adopt a brand position if it is known only to the company’s
executives and employees. The continuous and consistent communication of the brand’s
positioning to its target market is important to create impact in the market. All elements of the
product must be consistent to the brand’s selected positioning.
For example, products intended for the female market are packaged in relatively small
containers (for comfortable handling by a woman’s hand), in soft shapes, and labeled in colors, e.g.
pink, lavender, etc.. For products intended for the upper income classes, they would be priced
relatively higher.
Some of the elements to be considered in communicating brand positioning are:
 Packaging
 Labeling
 Selling Price
 Advertising
 Brand endorser
 Tagline
Examine this caselet: (Note: the following was established through the authors’ observation)
In 2015, kopiko launched 78°C, a ready-to-drink coffee latte. As lattes are mixtures of espresso
coffee and milk, Kopiko positioned itself as the “best tasting latte,” extracted a temperature of 78°C.
It claims that 78°C degrees in the optimum extraction temperature for coffee. The result is a latte that
has “rich taste and tempting aroma. “It comes in a “shapely” PET bottle. The 30-second video
advertisement casts European-looking endorsers. It used the University Athletic Association of the
Philippines (UAAP) as its major advertising vehicle. This is particularly effective since the primary
target market are students of the UAAP member schools and viewers of the athletic games. In
addition, the campaign also focuses on the 78th year of UAAP. The product or brand is placed
prominently in all advertisements announcing UAAP game schedules.
Identifying and Selecting Competitive Advantage
Competitive advantage is defined as the superiority of an organization over competitor. It
typically answers the question “Why should the customer purchase from this company instead of its
competitors?”
 Cost advantage - results when firm has the ability to produce a product or service at a
lower cost compared to its competitors
This cost superiority will result in the company either being able to sell its products or
services at a lower price than its competitors, or generate a larger margin from its sales.
 Differential advantage - when a company’s product or service differs from its competitors
and are perceived by consumers to be better or of greater value.
 Focus advantage - When a company knows its target market very well, and can service its
needs better than any of its competitors.
Competitive advantage can be achieved through external or internal means. Companies can take
advantage of opportunities that arise from changes in macro-environmental factors, and being
responsive to these changes. Internally, a company can achieve cost advantage or differentiation
through improvements int he production process, cost efficiency measures, branding, or product
innovation. Focus advantage, on the other hand, can be attained by studying and predicting the needs
and preferences of the target market.
Sources of competitive advantage include the company’s cost structure, products/service
offerings, and distribution networks, among others. In selecting its competitive advantage, the
company must know what operational attributes ( such as products/service offerings, and distribution
network, among others. In selecting its competitive advantage, the company must know what
operational attributes (such as product quality, technology, price, availability, service, etc.) are
important to its target market. Selecting an operational aspect with low importance to a company’s
target market will result to incremental competitive advantage.
What’s More
Activity 2:
Enumerate and briefly explain the following:
A. Major variables used in market segmentation
_______________________________________________________________________________
_______________________________________________________________________________
__________________________________________
B. Elements of target market
_______________________________________________________________________________
_______________________________________________________________________________
______________________________________
C. Elements of a good brand position
_______________________________________________________________________________
_______________________________________________________________________________
_____________________________________
What I Have Learned
Activity 3: Reflection
Research for an advertisement of a famous Philippin company. Then let them answer the
following questions:
1. Who do you think is the target market of this company? Why?
______________________________________________________________________
______________________________________________________________________
_________________
2. Do you think their company’s target market is appropriate with the products / services
they are offering? Why?
______________________________________________________________________
______________________________________________________________________
__________________________________
3. For you, why is it important for companies to have a particular target market?
______________________________________________________________________
______________________________________________________________________
____________________
What I Can Do
Activity 4: Research Project
Conduct a mini marketing research. Follow the guidelines and format provided
below:
Mini-Marketing Research Guidelines
The purpose of these research project is to challenge the students to think like a
marketing manager/researcher by applying the knowledge accumulated throughout
the chapter. Your going to conduct your own research study by formulating a
research problem, determining the research methodology to be used, collecting the
data, presenting the research report to the class.
Step 1: Choose a Topic
Your going to choose a topic that is home-based related to. Here are some ideas:
1. E-load business
2. Snacks
3. Mini Store
Step 2: Develop a Research Proposal
The sond step of the project is to develop a research proposal. This research proposal
will include the research objectives and an outline of their research design.
Step 3: Date Collection
During this step in the process, you will prepare for data collection and do the field
work necessary to collect the data. Use the following precedure as a guide:
1. Write the questionaire
2. Pre-test questionaire
3. Make revisions to the questionaire, if necessary, based on the pre-test.
4. Administer questionaire to target respondents
5. Conduct interviews (with in your family)
Step 4: Analysis of Data
During this phase, you will prepare your questionnaire for tabulation and nalyze the
data.
1. Code your questionaire prior to data input. You should have procedures for coding
open-ended questions.
2. Edit questionaires prior to data input. Develop an editing guideline for those who
will input the data.
3. Input the data from the questionnaires into a spreadheet application.
4. Develop at least 3 cross tabulations of the data.
5. Analyze and interpret the results.
6. Present the results in summary graphs and tables.
7. Draw conslusions from the result of data analysis, then recommend 3-5 points to
management that are specific and attainable.
Step 5: Write and Present the Research Report
The number of pages are meant to be guidelines, Your written report should
Include the following.
1. Title Page (1 page)
2. Table of Contents (1 page)
3. Executive Summary (5-10 pages max.)
The exucutive summary is considered by many to be most important part of the
research report. There may be only a few people who will have the time to read
the entire research report in detail. Most people will only focus on the executive
summary so it is important not to try to summarize the entire report, but rather
provide a concise summary of the following:
1. Brief statement of problem & reasearch objectives
2. Major findings
3. Conclusions
4. Recommendations
Oral Presentation
The oral presentation should be approximately 10-12 minutes and include:
A. Introduction of Presenters
B. Problem Definition
C. Research Objective
D. Research Methodology
E. Findings/Conclusions
F. Recommendations
Note: This oral presentation should be conduct by face to face presentation.
This involve by the 3 critiques and 1 presenter only . Your going to use as many
visual aids dduring the presentation as deem necessary. (follow the health
protocol: wear facemask, faceshield and observe social distancing
Note: This covered as a whole chapter:
POST-TEST
I- Write the blank the correct answer given inside the box.
Consumer markets
Data analysis
Test Marketing
Observation research
Advertising pre-and pos-testing
Concept, product development, and product studies
Usage, attitude, and image studies
Usage, attitude, and image studies
Location studies
Pricing tests
Target market studies
External factor research
___________ 1. It can be used to decide on the packaging, to determine the market reaction,
and to justify brand positioning.
___________ 2. It can be utilized by marketers to calculate a product’s or service’s optimal
price, and to determine price elasticity.
___________ 3. These studies can provide cost-effective ways on how to increase a
product’s/service’s awareness level and brand trial.
___________ 4. The information from these researches helps marketers identify
macro-environmental shifts.
___________ 5. It includes individuals and/or house-holds that purchase products and
services for personal consumption.
____________6. It reveals the effectiveness of point-of-purchase collateral materials.
____________7. It determines ideal retail store locations and is a valuable tool in site
selection.
____________ 8. These help identify, quantify, and understand the target market better.
____________ 9. These tests can determine advertising copy effectiveness, advertising
re-call, sales promotion response rates.
____________ 10. Based on these results, the company shall gauge the acceptability of a
proposed product/service.
Answer key
Activity 1
May vary
Activity 2
May vary
Activity 3
May vary
Activity 4
May vary
Post-Test
1. f
2. g
3. a
4. i
5. b
6. c
7. j
8. h
9. e
10. d
References
https://trackmaven.com/marketing-dictionary/market-segmentation/#:~:text=Market%20segme
ntation%20is%20the%20process,interests%2C%20needs%2C%20or%20locations.
https://www.google.com/search?q=branding+image&tbm=isch&ved=2ahUKEwjFoo6E24rrAh
UIfpQKHYr_CZUQ2-cCegQIABAA&oq=branding+image&gs_lcp=CgNpbWcQAzIECCMQJzIE
CCMQJzICCAAyAggAMgIIADICCAAyAggAMgIIADICCAAyAggAOgQIABBDUO8jWOsqYLgta
ABwAHgAgAFriAGcA5IBAzEuM5gBAKABAaoBC2d3cy13aXotaW1nwAEB&sclient=img&ei=J
SIuX4X8CYj80QSK_6eoCQ&bih=625&biw=1366#imgrc=K-b0LWpeDna64M
https://www.google.com/search?q=a+perceptual+map+of+mobile+phones+using+usage
+and+excitement&tbm=isch&ved=2ahUKEwjOrLmH24rrAhVIUJQKHVgrA78Q2-cCegQIABAA
&oq=a+perceptual+map+of+mobile+phones+using+usage+and+excitement&gs_lcp=CgNpb
WcQAzoFCAAQsQM6AggAOgQIIxAnOgQIABBDOgcIABCxAxBDOgYIABAIEB46BAgAEBg6
BAgAEB5QmudQWO7wUWDp81FoAHAAeACAAYMEiAG5NJIBDTM4LjE5LjEuMS4wLjGYA
QCgAQGqAQtnd3Mtd2l6LWltZ8ABAQ&sclient=img&ei=LCIuX87mCcig0QTY1oz4Cw&bih=6
25&biw=1366#imgrc=2uc8s861GE8xrM
Principles of Marketing Textbook and Manual by Real c. So, Oscar G. Torres (Authors) and
Angles A. De Guzman, DBA
SENIOR HIGH SCHOOL
Principles of Marketing
Quarter 1 - Module 4
Customer Relationship: Customer
Service
This instructional material was collaboratively developed and
reviewed by educators from public and private schools, colleges,
and/or universities. We encourage teachers and other education
stakeholders to email their feedback, comments, and
recommendation
to
the
Department
of
Education
at
action@deped.gov.ph
We value your feedback and recommendation.
Department of Education Republic of the Philippines
For the facilitator:
For the learner:
Introductory Message
TABLE OF CONTENT
Quarter II – Lesson 1-ABM_PM11-IIa-e-16
CONTENT STANDARD:
The learners demonstrate an understanding of the essence of the new product
development, pricing, placing (distribution), and promoting a product or service.
PERFORMANCE STANDARD:
The learners shall be able to design a new product or service, decide types of
pricing approach, and choose distribution methods and promotion tools that respond
to market trends
WHAT WILL YOU LEARN?
At the end of this module, you should be able to:
1. Define a product.
2. Differentiates the product, services and experiences
WHAT DO YOU ALREADY KNOW? PRE-TEST
Directions: From the pool words inside the box, choose the appropriate term for
each description below.
Satisfaction
Market share
Label
Marketing
Products
Packaging
Goods
Idea Generation Marketing Mix
______________ 1. It is a product’s “silent salesman”
______________ 2. It refers to tangible products that consumers can actually observe
with their senses.
______________ 3. It applies to anything that is offered to satisfy the needs and
wants of consumers
______________ 4. It serves to contain and protect, and sometimes, identify and
promote the product
______________ 5. It is the initial stage of the new product development process
LET US STUDY:
In order to appeal to the customers, organizations must align all of the four
elements of the marketing mix (4P’s: product, price, place, promotion) effectively. All
four elements must focus on the target market. They should create value by satisfying
the customers’ needs and wants.
We will learn more about the four elements of marketing mix. We’ll start by
discussing the first element in the marketing mix which is the Product. After
identifying need in the market, a company may have a product that is capable of
satisfying the need”.
Just to be very clear, product in the context of marketing does not refer to
tangible products such as grocery items and automobiles. The word “product” applies
to anything that is being marketed, whether it is a tangible product, an intangible good,
a service, a place, or even a person.
Here are some of the examples of products:
 Amusement parks
 Apps on smartphones
 Banking services
 Coffee shop: the coffee, the food, and the place itself
 Hotel accommodations
 Legal advice
 Musical bands
 Pet care
 Radio stations
 Social media sites
 Telecommunication services
 Television programs
The term “product” applies to anything that is offered to satisfy the needs and
wants of consumers, whether these are tangible goods or intangible services.
Nevertheless, we do need to step back momentarily, in order to discuss the critical
differences between goods and services.
Goods refer to tangible products that consumers can actually observe with
their senses. Goods are objects with physical manifestations and attributes that can be
detected by our senses.
Services, on the other hand, refer to intangible offerings that are abstract in
nature and cannot be observed with our senses. In fact, a key characteristic of services
is that the act of delivery itself is the product. Some of the services as products are
banking, investments and insurance; hotel accommodations, restaurants, bars, and
catering; news and entertainment; transport and freight; education, health care,
wholesaling and retailing; and professional consultations.
The following questions are asked:
1. What need does it satisfy?
2. What value does it offer to its customer?
3. What makes it unique?
4. What is its Unique Selling Proposition (USP)?
All of these must be answered with product’s target market in mind. Any
changes in any of the product’s features or attributes may necessitate a consequent
change in one or all of the other elements of the marketing mix (price, place and
promotion).
Physical products have several added components: the packaging and
labelling.
Packaging differs from labelling. Packaging serves to contain and protect, and
sometimes, identify and promote the product. A product’s packaging is different from
its label. Product packaging has several purposes:
 It protects the product en route to the customer
 It makes product storage and display more practical and effective
 It preserves the product for further customer use
When deciding on product packaging, four factors must be considered:
 The quantity of the product that should be contained in the
package
 Physical attributes of the packaging that facilitate customer use
 The legal requirements that packaging may comply with
 And the most appropriate shape of the package
On the other hand, labelling is a display of information about a product on its
container, packaging or the product itself. The following factors must be considered in
deciding on the labelling of a product:
 Establish the image or personality of the product based on the
tastes and preference of the target market
 Determine the most important feature of the product to the
target market
 Determine where the product will be sold and the applicable
regulatory requirements, if any
 Determine the placement of the product in relation to other
products, particularly competitors
Labels are, a product’s “silent salesman” and labelling is not an easy task
considering that there are many other competitive brands and products displayed on
the same shelves, all trying to attract the customer’s attention. Legal requirements
must also be considered in a product’s labelling for food and beverages. All food
products must contain the name of the manufacturer, country of origin, net content
and its nutritional value table. It must also include the product handling and
preservation requirements. Some marketers include other facts on their package label
that enhance marketability and even costumer’s trust. Examples are: the Sangkap
Pinoy seal, organizational endorsement such as by the Philippine Dental Association
or the Department of Health, ISO Certification, “free from animal testing” label or if
it conforms to the requirements of Muslim practices, the Halal seal.
One of the most effective ways to get ahead of the competition is through new
product development. Introduction of new products are instances when customers are
forced to buy existing products and services in the market even if these only partially
serve their needs. This is because there are only limited product options available in
the market. History is full of successful new product launches that have changed the
shape of entire industries and created entirely new ones. You may also add the
rationale behind new product development and elaborate the rationale.
The New Product Development Process
Idea
Generation
Idea
Screening
Product
Commercialzation
Concept
Development
and Testing
Marketing
Testing
Business
Analysis
Product
Development
Step 1: Idea Generation-the initial stage of the new product development process where any
or all of several idea generation techniques (need/problem identification, attribute listing, forced
relationship, morphological analysis, brainstorming, etc.) are used to generate as many new
products as possible.
Step 2: Idea Screening-the stage where the ideas generated in the initial step are screened
using the predetermined criteria to reduce them to a manageable few.
Step 3: Concept development and Testing-where new product ideas are converted to
customer-centered product concepts and tested by a representative sample of customers for
acceptability, believability, and potential intent.
Step 4: Business Analysis-pencil-purchasing stage where, based on concept development and
testing results, probable sales of the new product are calculated together with its costs and
potential probability
Step 5: Product Development-the new product development stage where the product concept is
converted into a tangible working prototype.
Step 6: Marketing Testing-the stage where the new product is marketed in a limited
geographical area to determine whether fine-tuning of attributes, positioning, pricing, advertising
and promotions program are necessary.
LET US REMEMBER:
Product and services are created because of human needs and wants. Information
about consumers’ tastes, preferences, perceptions, and priorities has significant
contribution to the design of the product. We cannot create products without any
existing need or want in the market. This enables the company to satisfy the needs and
wants of the consumers. Satisfied consumers mean satisfactory sales and income for
the company. This is the very essence of the product as an element of the marketing
mix.
LET US APPLY WHAT YOU HAVE LEARNED
Pretend that your company has been making and selling one product for the past
five years. Plan to make additional three products. These may be in the same category
as the first product or not. Use the following format.
PRODUCTS
Original Product
New Product 1
New Product 2
New Product 3
NEEDS/WANTS
THAT HAS BEEN
SATISFIED
GOODS OR
SERVICES
REASON FOR
OFFERING THE
PRODUCT
HOW MUCH HAVE YOU LEARNED FROM THIS MODULE? POST TEST
Pre-test
1. Label
2. Goods
3. Products
4. Packaging
5. Idea Generation
Answer Key
REFERENCES:
AB Ilano, Principles of Marketing, Rex Book Store
Real C. So & Oscar G. Torres, Principles of Marketing, Vibal Group
Quarter II – Lesson 2-ABM_PM11-IIa-e17
CONTENT STANDARD:
The learners demonstrate an understanding of the essence of the new product
development, pricing, placing (distribution), and promoting a product or service.
PERFORMANCE STANDARD:
The learners shall be able to design a new product or service, decide types of
pricing approach, and choose distribution methods and promotion tools that respond
to market trends
WHAT WILL YOU LEARN?
At the end of this module, you should be able to:
1. Identify and describe the factors to consider when setting prices and new
product pricing.
2. Enumerate the general pricing approaches.
WHAT DO YOU ALREADY KNOW? PRE-TEST
True/False. Draw a heart if the statement is true and write F if the statement is
otherwise.
________ 1. The unit variable cost includes the cost of direct materials, direct labor
and direct overhead.
________ 2. Total fixed costs incurred in a specific period must be shared by all units
of the product produced in the same period.
________ 3. Total cost of production need not to be taken into account before
determining the price of a product or service.
________ 4. The break-even point is the lowest possible price the company can set
for its product, under normal circumstances
________ 5. The choice of pricing strategy depends almost exclusively on a
company’s objectives.
LET US STUDY:
The price that a marketer charges for a product or service is a vital decision that
has far-reaching consequences. From the point of view of the business, products and
services are offered with the intention of making a profit. However, the customer has
a specific price in mind that he considers as “fair and profitable”. This is related to the
value or benefit that he expects to derive from the product or service. This makes
pricing tricky and challenging for marketers.
Total cost of production must be taken into account before determining the price
of a product or service. This is because it would make no business sense if the price is
less than the cost of production.
There are two types of production cost. The first one is the unit variable cost
which refers to all expenses incurred in manufacturing one unit of a product. This
includes the cost of direct materials, direct labor and direct overhead. The second one
is the fixed cost or the unit share of operating and other expenses.
Product Cost Estimation
With physical products, two types of costs are calculated: (1) unit variable cost
and (2) unit share of operating and other expenses, or what is sometimes referred to as
fixed costs.
The unit variable cost refers to how much it would cost to manufacture one unit
of the product. This includes the cost of direct materials, direct labor and direct
overhead.
Direct materials used in the manufacture of a shirt may include the fabric, thread
and buttons. For example, if two meters of fabric, five meters of thread, six buttons
and one cardboard box for product packaging are used, its material cost would be
computed as follows:
Material
Cost
Cost per Shirt
Fabric
P100.00 per meter
P200.00
Thread
P4.00 per meter
P20.00
Buttons
P5.00 per meter
P30.00
Cardboard Box
P10.00 per meter
P10.00
Total
P260.00
The total direct material cost for producing each shirt would be P260.00
Direct labor would include the wages of all workers directly responsible for
making the shirt. If, for example, workers are paid on a per-piece basis, its unit direct
labor cost would be as follows:
Process
Labor Cost per Piece
Fabric cutting
P30.00
Sewing
25.00
Collar Attachment
5.00
Button Attachment
5.00
Total
P65.00
The total direct labor per shirt would then be P65.00
If workers are paid on a daily basis, weekly, or semi-monthly rate rather than on a
per-piece basis, the computation of labor cost would be more complex as the total unit
output per period of production would have to be included.
The unit’s direct overhead is the amount that was spent in the manufacturing
overhead (energy, water and other utility costs) for every shirt produced. This can be
computed by dividing the total factory manufacturing overhead in a month by the
number of units of shirts produced within the same month. If the total factory
manufacturing overhead for a particular month is P20,000 and the total number of
shirts produced within the same month is 4,000 pieces, the direct overhead cost per
unit would be P5.00
The sum of the three costs (direct materials, direct labor, and direct overhead) is
the product’s unit variable cost or the cost to produce one unit of the product.
The second type of cost unit share of fixed costs. Fixed costs are expenses
incurred by the organization that are not related to the manufacture of the product.
These include executive and staff salaries, office rental, advertising, and promotions,
professional; fees and other similar expenses. Total fixed costs incurred in a specific
period must be shared by all units of the product produced in the same period. This
means that if in a particular month, the shirt factory incurred total fixed costs of
P400,000 and was able to produce 4,000 units of shirt for the same month, each shirt
would have to absorb P100.00 of fixed costs.
Taking the entire costing example, therefore, the total unit cost of each shirt would be:
Cost Component
Amount
Direct Materials
Direct Labor
Direct Overhead
Unit Fixed Cost
P260.00
65.00
5.00
100.00
Total
P430.00
Therefore, if the shirt factory is able to sell each of the 4,000 shirts it produced in
a particular month at its unit cost of P430.00, the company would make no profit but
will also incur no loss. This is called the break-even point. This is the lowest
possible price the company can set for its shirts (under normal circumstances)
If the company decides to sell its shirts at only P425.00, it will incur a loss of
P5.00 per shirt. If in a given month it is able to sell 4,000 shirts at this price, it stands
to lose P20,000
However, the shirt manufacturer may decide to price its shirt at P500.00. At this
price, it shall make a profit of P70.00 per shirt. If it sells its entire month’s output at
this price, the company would make a profit of P280,000
Service and experience costing are also computed, with unit variable costs
represented by the cost of the service/experience providers.
Pricing Strategies
The following are strategies that can be used in pricing a product:
1. Mark-up pricing – is a pricing strategy that allows the seller a fixed mark-up
every time the product is sold
The biggest weakness of this pricing strategy is the inclusion of unit sales in
determining the product’s mark-up price. In reality, total unit sales is affected by the
product’s final mark-up price
See the example below to find out how to compute the mark-up price of a
product.
UC = VC/U + FC
US
Where:
UC
- Unit Cost
VC/U - Variable Cost per Unit
FC - Fixed Cost
US - Unit Sales
Given:
VC/U
- P10.00
FC
- P300,000.00
US
- 50,000 units
DMU(Desired Mark-Up) - 20%
UC = VC/U + FC
US
= P10.00 + P300,000.00
50,000 units
= P16.00
MUP =
(1-DMU)
UC__
(1 - 0.20)
= P20.00
= P16.00__
Mark-up price (MUP) is P20.00
2. Target Return Pricing – is a pricing method that allows a product manufacturer
to recover a certain portion of his/her investment every year. Because unit sales is also
included in its target price determination, target return pricing has the same weakness
as that of mark-up pricing.
The formula for obtaining a product’s target return price is as follows:
TRP = UC + DR x IC
US
Where:
TRP
- Target Return Price
UC - Unit Cost
DR - Desired Return
IC - Invested Capital
US - Unit Sales
Given:
UC
DR
IC
US
-
P16.00
25%
P1,000,000.00
50,000 units
TRP = UC + DR x IC
US
=
P16.00 + 0.25 x P1,000,000.00
50,000 units
= P21.00
Target Return Price (TRP) is P21.00
3. Odd pricing or Psychological pricing – is a pricing method premised to the
theory that consumers will perceive products with odd price endings as lower in price
than they actually are. As such, consumers may find products priced at P99.95 closer
to P99.00 than to P100.00. There are about an equal number of researches that say this
is true, and those that say that it is inconclusive.
4. Loss leader pricing – a pricing strategy frequently utilized by supermarkets. It is
based on the practice of housewives to use only a few selected essential products (e.g.
sugar, coffee, eggs, laundry detergents, and some canned good products) as their sole
basis for price comparison. Supermarket retailers will deliberately price these “loss
leaders” or comparison items low to make their products appear more affordable than
others. The mark-up lost on these loss leader items are recovered from other items
where mark-ups are higher.
5. Price lining – a pricing strategy designed to simplify a consumer’s buying decision.
This method involves reducing the number of price points on merchandise to as little
as possible, in extreme cases to only one price point. For example, some stores price
all the merchandise in their store at P66.00 or P88.00
6. Prestige pricing – a pricing strategy that disregards the unit cost of a product or
service. Instead, it capitalizes on the high value perception or positive brand
reputation of a product or service. It charges a price much higher than its unit cost.
This is s pricing strategy implemented by some fragrance and skin care products.
Using prestige pricing, it would not be unusual for a fragrance brand to have a unit
cost of P1,300.00 and a selling price of P3,500.00
7. Marginal pricing – where a business organization prices its product at a range
below its unit cost but higher than its unit variable cost
This is in order to offer the lowest price in a sealed bidding or other highly
competitive situations. The failure to adequately cover some or all of the company’s
fixed costs is justified by citing that theses fixed costs are “sunk” or would be
incurred whether or not the order is required. The main objective of marginal pricing
is to out maneuver competition, expand customer base and increase market share.
8. Predatory pricing – a pricing strategy where the firm prices its product lower than
unit variable cost, initially resulting in short-term losses.
The objective of this pricing strategy is to price a new or persistent competitor out
of the market. After its purpose is achieved, the product’s original selling price is
restored and short-term losses recovered. Predatory pricing is illegal in most countries
including the Philippines (under Republic Act 8479)
9. Going rate pricing – a pricing strategy where a company prices its product at the
same level as or very close to its competitors’ prices.
This effectively maintains the product’s price competitiveness in its market. The
danger of going rate pricing is that it may result in price wars, with each company
trying to outprice another, to the detriment of all industry participants.
10. Promotional pricing – a pricing strategy involving a temporary reduction in the
selling price of a product/service in order to induce trial or to encourage repeat
purchase. Almost companies, especially those involved in fast-moving consumer
goods (FMCGs), implement promotional pricing at one time or another.
When new products are introduced into the market, one of the two pricing
strategies can be used:
1. Price skimming – where the product’s selling price is way above its unit cost. This
allows the company to recover its research and development costs and expenses. This
is usually accompanied by intense expensive advertising and promotional campaign.
This pricing decision is usually effective with electronic products, especially when the
said products are still non-existent in the market. There is hardly a way to compare
prices. Customers are usually left with little or no choice. This was the strategy
employed by a mobile company when it launched its mobile phone in the Philippines
in the early 1980’s. The mobile phone was initially priced at almost P60,000.00. The
price was reduced gradually when similar devices were introduced in the country and
initial advertising, promotions and research and development costs were recovered.
The inherent weakness of the price skimming strategy is that it makes the market very
attractive for would-be competitors because of the appeal of large price markups.
2. Penetration pricing – a pricing strategy where the new product is priced only
marginally above its unit cost. The objective of this strategy is to capture a large part
of the market at an early stage by making the product affordable to the greatest
number of people. An advantage of this strategy is that it can discourage would-be
competitors from entering the market because of low price mark-up. The major
disadvantage of this pricing method is that it can prolong the recovery period for
research and development, advertising, and promotions costs.
Pricing Strategy Selection
The choice of pricing strategy depends almost exclusively on a company’s objectives.
The correspondence between pricing strategy and objective is illustrated below:
Pricing Objective
Pricing Strategy
Maximum revenue
Penetration pricing
Marginal pricing
Going rate pricing
Promotional pricing
Maximum market share
Penetration pricing
Marginal pricing
Going rate pricing
Maximum profit
Survival
Promotional pricing
Price skimming
Prestige Pricing
Marginal pricing
LET US REMEMBER:
Pricing depends on the business objectives set by the company. Finding the right price
for a product is not a simple matter of adding a mark-up on the cost of a product or
services, as some companies do. The company should set the prices of its products or
services based on its business objectives.
LET US APPLY WHAT YOU HAVE LEARNED
In your opinion, should wealthier people pay more for the exact same products that
less fortunate people buy? Explain why or why not.
HOW MUCH HAVE YOU LEARNED FROM THIS MODULE? POST TEST
SUPER PREMIUM HOTEL ROOMS
Choose a hotel and research (online or otherwise) on its room rates as well as the
amenities that it offers for the price. Identify the most expensive room that it is
currently offering.
You are to propose an even more premium-priced room, with a price point that is
very much higher than the current premium rates which the hotel offers. Identify the
amenities that you feel would satisfy the high price point you are proposing.
Rubrics:
CRITERIA
DETAILS
TOTAL
YOUR
POINTS POINTS
Price Canvassing
Did the group give a clear picture of the
hotel’s prices?
10
Viability of Proposal How viable is the proposed price and
amenities?
30
Creativity
How creative or innovative is the proposal?
10
Total
50
Pre-test
1.
2.
3. F
4.
5.
Answer Key
REFERENCES:
AB Ilano, Principles of Marketing, Rex Book Store
Real C. So & Oscar G. Torres, Principles of Marketing, Vibal Group
Quarter II – Lesson 3-ABM_PM11-IIa-e18
CONTENT STANDARD:
The learners demonstrate an understanding of the essence of the new product
development, pricing, placing (distribution), and promoting a product or service.
PERFORMANCE STANDARD:
The learners shall be able to design a new product or service, decide types of
pricing approach, and choose distribution methods and promotion tools that respond
to market trends
WHAT WILL YOU LEARN?
At the end of this module, you should be able to:
1. Discuss the structure of distribution channels, its functions, and.
2. Discuss the nature of supply chain management
3.
WHAT DO YOU ALREADY KNOW? PRE-TEST
1. Is the method of distribution of products to the end-users important?
2. If you were the manufacturer, what method of product distribution would
you prefer?
3. Many products are now being sold online. Name three products that you
believe should never be bought online but only in real store. Explain why.
LET US STUDY:
Place
How can a company deliver its products to its customers effectively and
efficiently? This is the next vital marketing decision. Similar to the first P (product),
product distribution decisions are almost permanent, as distribution channels do not
change on a daily basis. The product type is also a major consideration in deciding the
type of distribution channel or intermediary. Mass market or a fast-moving consumer
goods may require intensive distribution, while products like expensive fragrances
may necessitate only selective, if not exclusive, distribution.
The Need for Marketing Intermediaries
Because most companies today serve relatively large markets and their consumers are
geographically dispersed, they rarely sell their products directly to the consumer.
Instead, they utilize marketing intermediaries, also called distribution channels, to
bring their products to the customer. Although most marketing intermediaries, i.e.
wholesalers and retailers, are independently owned, some product manufacturers may
decide to own a few, if not all, of their retail outlets.
Intermediaries provide access and convenience for the product’s consumers. The
following are other key functions of intermediaries:
1. Information collection and dissemination. – marketing intermediaries,
particularly retailers, provide product manufacturers with vital marketing research
information on consumer profiles and product movements. These are valuable for
decision-making.
2. Product storage and movement – the warehousing facilities of manufacturers are
relieved of large amounts of merchandise. Intermediaries or channels take care of
storage and transport of products to the customer.
3. Operational financing – distribution channels that take care of storage and
transport assumes the costs of these activities
4. Product promotion – intermediaries, particularly retailers, help in the
development and implementation of communications programs to enhance product
sales
5. Risk-taking – most marketing intermediaries eventually pay for merchandise they
carry. They assume financial risk if the product does not sell as expected.
The use of marketing intermediaries increases the price of the product. However,
the absence of intermediaries would result in greater expense for the customer. A
customer wanting to drink a bottle of soda will have to go to the bottling plant
because the soda is not available in the convenience store (a marketing intermediary).
A customer has to buy a piece of candy from the manufacturer because it cannot be
purchased at the sari-sari store (another marketing intermediaries)
Supply Chain
A supply chain is the network of all the individuals, organizations, resources,
activities, and technology involved in the creation and sale of a product. The chain
starts from the delivery of materials from the supplier to the manufacturer, to the
eventual delivery of the finished product to the user. The supply chain segment
involved in the delivery of the product from the manufacturer to the consumer is
known as distribution channel.
With supply chain management, partnerships and collaborative efforts are
established among product material suppliers, the labor force, warehousing, shipping
and transportation companies and product intermediaries. The objective is to optimize
the supply chain that results in better product manufacturing and distribution. This
also leads to overall cost reduction and higher sales.
Product Distribution Types
There are three general ways on how a product can be distributed using marketing
intermediaries:
1. Exclusive distribution – distribution is limited to a select number of dealers,
usually one or a few. The objective of exclusive distribution is to have more control
over how a particular brand is priced, displayed and promoted. Products that are
distributed exclusively usually enjoy higher markups and better brand equities. The
major disadvantage of this type of product distribution is that brands are not very
accessible to customers. Customers need to travel long distances to get where the
product is available. OshKosh B’Gosh, a popular and upscale children’s apparel brand,
for example, is exclusively distributed in the Philippines by Cinderella Marketing
Corporation.
2. Intensive distribution – this product distribution type, used mostly by fast-moving
consumer goods and convenience goods, involves making a product available in as
many retail outlets as possible.
This type of product distribution gives consumers the highest level of utility and
convenience. However, product manufacturers have very little control on how the
product is priced, displayed or promoted. When a local soft drink was launched in the
market to compete against lower-priced soft drinks, the bottler implemented an
extensive advertising campaign, promoting its low P7.00 price to customers. However,
few sari-sari stores sold the soft drink at P8.00 suggested retail price (SRP). The
stores continued to sell the product at P8.00. This reduced the company’s effort to
erode the market share of competitor brands.
Some examples of products sold via intensive distribution are bottled drinking
water, candy, and snack foods, etc.
3. Selective distribution – positioned between exclusive and intensive distribution,
this type of product distribution involves the use of more than one but not as many
dealers as in intensive distribution. This allows adequate manufacturer control over
retail prices, displays and promotions. However, it permits selected product
distributors some level of independence. Products commonly sold through selected
distribution are brands of canned foods, seasoning, and personal care products.
Wholesaling and Retailing
Wholesalers and retailers are two of the most crucial distribution intermediaries, most
especially in providing place utility for a product’s customers.
Wholesaling – is the sale of goods for resale. Wholesaling is an important product
distribution function. Without wholesalers, product manufacturers would have to
deliver goods directly to retailers.
Because wholesalers perform a valuable distribution function, manufacturers
allow them a markup for the goods distributed. Wholesalers perform the following
key functions:
 Information collection and dissemination
 Bulk-breaking
 Assortment-building
 Product storage and transportation
 Financing
 Risk-taking
Retailing – is defined as the sale of goods/services to the final customer for his
personal consumption. Typical examples of retailing establishments are drug stores,
sari-sari stores, restaurants, movie houses. Convenience stores and supermarkets.
Among others, product retailers perform the following key functions:
 Information collection and dissemination
 Product assortment selection
 Product storage
 Financing
 Product promotion
 Risk-taking
Retail stores are accessible to its customers where purchases are done in a
single and simple transaction.
LET US REMEMBER:
The product is not necessarily produced and consumed in the same place. The
place of production or the plant site can be different from the place of distribution or
selling. The service is produced and consumed in the same place. It cannot be owned
and taken away from the location.
LET US APPLY WHAT YOU HAVE LEARNED
Three different kinds of stores are presented below. Identify what you believe makes
each one different from the other.
Store
In Terms of Size
In Terms of Items
In Terms of Prices
Supermarkets
Groceries
“Sari-sari” stores
HOW MUCH HAVE YOU LEARNED FROM THIS MODULE? POST TEST
1. Give an example of a locally made product that you believe will have a good
chance of competing in a regional market. Explain why?
2. What advantages can a convenience store chain, such as 7-eleven have over
traditional sari-sari stores?
3. What is your favorite grocery store destination? Explain why it is your destination
of choice. What does the place provide?
REFERENCES:
AB Ilano, Principles of Marketing, Rex Book Store
Real C. So & Oscar G. Torres, Principles of Marketing, Vibal Group
Quarter II – Lesson 4-ABM_PM11-IIa-e19
CONTENT STANDARD:
The learners demonstrate an understanding of the essence of the new product
development, pricing, placing (distribution), and promoting a product or service.
PERFORMANCE STANDARD:
The learners shall be able to design a new product or service, decide types of
pricing approach, and choose distribution methods and promotion tools that respond
to market trends
WHAT WILL YOU LEARN?
At the end of this module, you should be able to:
1. Define and identify relevant promotional tools, namely, advertising, sales
promotion, personal selling, public relations, and direct marketing
2. Create awareness and persuade the target market to buy the product or
patronize the service
3.
WHAT DO YOU ALREADY KNOW? PRE-TEST
1. Discuss how you feel about advertising. Is it good? Is it bad? Explain why?
2. In your own opinion, what is the best way to promote a product, for instance a
new burger outlet, without having to resort to expensive advertising? Explain your
answer
LET US STUDY:
Promotion
Promotion as used in the 4P’s is a general term which includes the following:
advertising, promotions, personal selling, publicity, and public relations.
Sender
Advertiser
Encoding
Receiver
Message
Barriers
Decoding
Consumer
The
Marketing Model on the above figure illustrates how marketing companies
communicate product information and other
advertising messages to their customers.
Feedback
In the context of advertising, the advertiser is the party that intends to send a
commercial message to the consumer.
For the initial step, the adviser first encodes his/her message. He does this by
incorporating signs, images, language, words, colors, sounds, personalities, and
characters that best capture the message that he intends to communicate to the
customer. Before this, the advertiser must identify his target market. Different
consumer geographic, demographic, and psychographic profiles require different
messages. For example, message intended for the elderly need to be restrained as
compared to a message intended for teenagers. Messages for the younger market can
be colourful, loud, and exciting. The advertiser then decides on the medium to be used
to transmit the message. Radio, for example, is unable to present visuals, making its
advertising copy (i.e. advertising textual content and voiceover) more critical and
important. Television, on the other hand, is effective with visuals.
The advertising message is sent to the intended customer through a selected
medium (e.g. television or newspaper). The advertiser expects that the customer (1)
sees/hears the advertising message, (2) decodes/understands and interprets the
message accurately as intended, (3) remembers and/or recalls the message, and (4) is
affected by the message and responds by making a purchase.
However, barriers in message transmission may prevent the customer from
receiving or understanding the intention of the message. For example, in television
advertisements, the video signal and sound reception may be poor, or there is
background noise while the advertisement is being aired.
The purpose of promotions is to elicit a change in behaviour. Getting people to
buy your product, when previously they did not, constitutes a change in behaviour.
But the behavioural objective need not be abrupt. Often, consumers first need to be
primed in order to allow them to collect positive feelings towards the product, before
finally getting them to actually purchase it.
The Hierarchy of Effect model states that consumers need to go through six
stages before finally buying a product. (Steiner 1961) These are:
1. Awareness – the realization that your product exists
2. Knowledge – comprehension about your product’s features and benefits
3. Liking – gaining positive feelings toward your product
4. Preference – deciding that your product is better than others
5. Conviction – the belief that your product is worth buying
6. Purchase – actually buying your product
Promotions are often designed to guide consumers through these stages
Advertising
Advertising is defined as any paid and public presentation of products, services or
ideas by an identified sponsor through a medium. The most common objectives of
advertising are:
 To build awareness
 To inform
 To persuade
 To remind
Brand awareness is the extent to which consumers are familiar with the
distinctive qualities or image of a particular brand of goods or services. Achieving a
high level of awareness provides the brand the following advantages:
1. Learning advantages – which heavily influence the formation and
strength of associations that comprise the brand’s image
2. Consideration advantages – which increase the likelihood that the
brand will be included in the comsumer’s “consideration set”, or the set of brands that
receive serious consideration for purchase.
3. Choice advantage – which can affect choices among brands included
in the consideration set, despite the fact that there may be no other associations to
those brands.
Advertising Campaigns
Before launching advertising campaigns, companies go through the following steps:
1. Identifying the target market.
All marketing efforts always begin with the identification of the target market of the
product/service. This is the preliminary step to identify the type of message, the
medium to be used, the advertising appeal to create, and the celebrity endorsers (if
any) to be selected.
2. Establishing advertising objectives
After the target market is determined, the company formulates the objectives of the
advertising campaign. It the purpose is to create awareness, the desired level of
awareness should be identified. Targets with the high level of awareness require
multiple advertising placements with greater frequency of exposures.
3. Determining advertising objectives
The message is the most important component of the advertisement. It varies
depending on the objective. Objectives can be to inform, to create awareness, to
persuade, or to remind. Examples of advertising message styles are as follows:
 Functional – attempts to provide a product brand as the solution to a
current comsumption problem experienced by customers (e.g. a deodorant
advertisement launched in 2007)
 Symbolic – attempts to associate brand ownership with an inspirational
group. It addresses other abstract need states that involve aspects not addressed by
functional product benefits (e.g. another skincare product advertisement (a product
facial cream) showing physical transformation aired in 2016).
 Experimental – attempts to promote brands using high sensory value. It
satisfies customers’ desire for products that provide sensory pleasure. (e.g.
advertisement of a popular vitamin E product)
4. Selecting media
After determining the content of the message, the company now selects among
available media vehicles (i.e. television, radio, print, or web). Media vehicles vary in
cost, with distinct advantages and disadvantages, and varying levels of reach.
5. Managing and coordinating the marketing communication process
With various media vehicles available, the company may utilize multiple vehicles (e.g.
television and radio advertising, public relations, and publicity) to deliver the message
to its target market. These efforts must be coordinated to ensure unity of message.
This is referred to as integrated marketing communications (IMC). At the
conclusion of the advertising campaign, the company evaluates the effectiveness of
the program by determining its return on marketing investment (ROMI).
Types of Media and Techniques Used in Advertising
Traditional Media and Techniques
Radio – A viable advertising vehicle in the Philippines since 1922, radio is the most
accessible media. Philippine radio stations broadcast in either the AM or FM bands,
with AM stations broadcasting mostly talks, news, or opinion programs. On the other
hand, FM stations primarily broadcast music, with each radio station specializing on a
particular type, such as classical, hip-hop, rock or pop.
Advantages
Disadvantages
relatively inexpensive
audio only
Target marketing possible
frequency required for effectiveness
passive medium
Print – The first magazine in the Philippines was printed in the 1980s, while the first
English newspaper was published and circulated in 1898. Many advertisers still favor
newspapers as their vehicle of choice because of their national circulation, population
penetration, and pass-on readership.
Newspaper
Advantages
Disadvantages
credible
spillage
pass-on readership
obsolescence
target marketing possible
poor image quality
Magazine
Advantages
good image quality
target marketing possible
not subject to obsolescence
Disadvantages
long lead time
difficult to time advertising
Television – Television networks and stations broadcast through both free and cable
channels. Similar to radio, some television stations select programming content to be
exclusively public affairs, entertainment, children’s programs or educational TV.
Advantages
Disadvantages
audio, video, and movement
expensive
target marketing possible
frequency necessary for effectiveness
Alternative Media and Techniques
Cinema – The first motion picture in the Philippines appeared in 1904. Since then, a
large number of cinema houses and movie theaters have sprouted in major
metropolitan cities, particularly in Manila.
Advantages
Disadvantages
audio, video and movement
Not cost efficient
larger than life
Limited to reminder advertising
captive audience
Short attention span
Relatively inexpensive
Billboard – The relatively low cost but high exposure to heavy traffic along major
thoroughfares have led to the popularity of billboard advertisements. Despite
increasing rental costs and the imposition of government regulations on this type of
outdoor advertising, billboards continue to thrive and has technologically evolved
from traditional billboards to the use of light-emitting-diodes (LED).
Advantages
Disadvantages
relatively inexpensive
short messages only
larger than life
reminder advertising only
exposed to many potential customers
may be damaged by elements
legal restrictions
Websites – Almost all legitimate companies have developed websites that customers
can access for product information and services. Websites have become highly
interactive. However, the media suffer from clutter due to the sheer number of
websites currently online. As of January 2013, there is a total of 634 million websites,
with almost 50 million added yearly.
Advantages
Disadvantages
low cost
high level of detail
customized
interactive
must be upgraded regularly
clutter
Social Networking Sites – The large number of social media users all-over the world
has led to the popularity of social networking sites as media for advertising. Statistics
indicate that there are currently over 1 billion active monthly users of Facebook, 200
million on Twitter, and 187 million members in LinkedIn as of 2016. (Source: The
Statistics Portal.com)
Advantages
Disadvantages
low cost
May be ignored
high level of detail
well-segmented audience
Directory Advertising – More commonly known as the “Yellow Pages”, this
medium has been declining rapidly. This is brought about by an increasing number of
households discontinuing landline subscription. Moreover, the availability of online
search engines has made the search for specific products and services more
convenient.
Advantages
Disadvantages
pinpointed advertising
accompanies declining technology
timely
Product Placement – Product placement is an advertising technique used by
companies to promote products subtly through a non-traditional advertising technique,
e.g. appearances on film, television, or other media. Pierce Brosnan’s use of a BMW
in his James Bond film or John Lloyd Cruz in You Changed My Life, taking a
Biogesic tablet to relieve himself of a headache, are examples of product placement in
the film.
Advantages
Disadvantages
unique exposure
little stand-alone value
well-segmented audience
sometimes used abusively
E-mail advertising – there are currently 2.2 billion e-mail users worldwide,
transmitting 144 billion e-mails daily. The biggest downside to e-mail advertising is
that 68.8% of it is classified as “spam” and often left unopened and unread by the
recipient.
Advantages
Disadvantages
no cost
clutter
highly targeted
messages sometimes classified as
“spam”
Transit Advertising – buses and jeepneys in the Philippines ply the same route every
day. An advertising signage on the side or back of a bus, a jeepney spare tire cover, or
perched atop a taxicab can create good brand recall for the market.
Advantages
Disadvantages
mobile
short messages only
relatively inexpensive
consistent daily audience
reminder advertising only
may be damaged by the elements
Online Ads – Out of 2.4 billion Internet users worldwide, 1.1 billion are from Asia.
These figures have led to the popularity of Internet advertising, which permits target
marketing through the use of cookies generated by a web page server.
Advantages
Disadvantages
well-segmented audience
Easy to ignore
low cost
Direct Response Advertising – Used extensively on television during specific
periods of the day and usually presented in telemarketing programs, direct response
advertising mostly showcases products not available through conventional retailers.
Characteristics of direct marketing messages are dramatization and the use of
incentives to solicit early response. This type of advertising, however, suffers from
poor image as customers complain of products not being faithful to how they are
represented in the advertisement.
Advantages
Disadvantages
high-information content
clutter
measurable
poor image
Point-of-Purchase, Signs, Posters and Leaflets – these are relatively inexpensive
ways to advertise and promote a product. For example, point-of-purchase materials
(e.g. shelf talkers and retailer floor signs) are effective in persuading a customer to
prefer one brand of product over another.
Advantages
Disadvantages
last ditch purchase reminder
short messages only
close proximity to physical product
reminder advertising only
Promotion
Promotions are activities or a series of activities, usually short-term, that are intended
to boost the sales of a product or service. These are actions a company can take to
stimulate customers to buy immediately than later.
There are essentially two types of promotions:
1. Trade promotions – Trade promotions are intended for marketing intermediaries
such as retailers. The purpose of trade promotions is to encourage the intermediaries
to increase purchases, to stock a particular product, to accelerate purchases or
payments for purchases, or to extend preference towards a particular brand. Some
examples of trade promotions are 10+1 (if a retailer orders ten cases of a product, the
manufacturer delivers 11 cases but does not charge for the extra case), giving retailers
free store signages to carry a specific product brand, and contests among participating
retailers. Trade promotions “push” products to the retailer or trade outlet.
2. Consumer promotions – Consumer promotions, on the other hand, are intended
for consumers. The purpose of consumer promotions is to induce product trial,
encourage brand switching, or reward consumer patronage. Examples of consumer
promotions include the distribution of product samples, consumer contests,
sweepstakes, coupons, and raffles. Consumer promotions “pull” consumers to brand
retailers or trade outlets to see, try, and/or purchase the product.
Personal Selling
Personal selling occurs when an individual salesperson sells a product, service or
solution to a client. Personal selling is necessary in the marketing mix when
products/services are highly technical, fairly complex, durable, expensive or not
actively sought out by customers, especially when its customers are companies and
institutions instead of individual customers.
The success of personal selling depends on company salespeople understanding
customer needs and their ability to build long lasting client relationships. Personal
selling is a very expensive method of product promotion where product/service
pricing is often negotiated.
Products and services most commonly promoted and sold through personal
selling are institutional product such as equipment, recurring supplies, motor vehicles,
homes, financial services, and unsought goods such as life insurance memorials plans.
Public Relations
Public relations is creating and maintaining goodwill of an organization’s various
publics (customers, employees, investor, suppliers etc.) through publicity and other
nonpaid forms of communication. These efforts may also include the support of the
arts, charitable cause, education, sports events, and other civic engagements.
Public relation looks after the public’s perception of company or its brands
reputation, with the end of influencing opinion and behaviour. A lot of companies
engage in public relation efforts. A fast-food chain, for example, has a toy-giving
program for indigent children. Other companies support one or more charities such
the hospicio financial support during natural calamities, e.g. typhoon.
Publicity
Publicity is a communication written and produced by the public relations
professionals intended to create a favourable public image for a client. Publicity
usually takes the form of text, audio, and video news releases about individual or
organization. They are distributed to newspapers, magazine, radio and television
stations, internet sites, and other form of media.
Many regards publicity as a more effective promotional tool compared to
advertising. Publicity reaches a wider audiences, making it more cost-effective and
may have higher recall from general public than advertisement. Because publicity is
often published or circulated by third party entities such as magazines and newspapers,
it has a higher level of credibility as compared to advertising.
In the early 1990s, rumors spread that the Philippine hamburger fast food chain
was using earth worms, instead of beef, for its burger patties. In response, the chain
launched a publicity campaign through third parties. It convinced the public that it
does not make business sense to use earthworms are more expensive than ground beef.
Soon, the public realized that the allegation was not logical and the rumors died.
Raffles. Consumer promotion ‘pull’ consumers to brand retailers or trade outlets tp
see try, and/or purchase the product.
Personal Selling
Personal selling occurs when an individual salesperson sells a product, service or
solution to a client. Personal selling is necessary in the marketing mix when
products/services are highly technical, fairly complex, durable, expensive or not
actively sought out by customers, especially when its customers are companies and
institutions instead of individual customers.
The success of personal selling depends on company salespeople understanding
customer needs and their ability to build long lasting client relationships. Personal
selling is a very expensive method of product promotion where product/service
pricing is often negotiated.
Products and services most commonly promoted and sold through personal
selling are institutional product such as equipment, recurring supplies, motor vehicles,
homes, financial services, and unsought goods such as life insurance memorials plans.
Public Relations
Public relations is creating and maintaining goodwill of an organization’s various
publics (customers, employees, investor, suppliers etc.) through publicity and other
nonpaid forms of communication. These efforts may also include the support of the
arts, charitable cause, education, sports events, and other civic engagements.
Public relation looks after the public’s perception of company or its brands
reputation, with the end of influencing opinion and behaviour. A lot of companies
engage in public relation efforts. A fast-food chain, for example, has a toy-giving
program for indigent children. Other companies support one or more charities such
the hospicio financial support during natural calamities, e.g. typhoon.
Publicity
Publicity is a communication written and produced by the public relations
professionals intended to create a favourable public image for a client. Publicity
usually takes the form of text, audio, and video news releases about individual or
organization. They are distributed to newspapers, magazine, radio and television
stations, internet sites, and other form of media.
Many regards publicity as a more effective promotional tool compared to
advertising. Publicity reaches a wider audiences, making it more cost-effective and
may have higher recall from general public than advertisement. Because publicity is
often published or circulated by third party entities such as magazines and newspapers,
it has a higher level of credibility as compared to advertising.
In the early 1990s, rumors spread that the Philippine hamburger fast food chain
was using earth worms, instead of beef, for its burger patties. In response, the chain
launched a publicity campaign through third parties. It convinced the public that it
does not make business sense to use earthworms are more expensive than ground beef.
Soon, the public realized that the allegation was not logical and the rumors died.
Raffles. Consumer promotion ‘pull’ consumers to brand retailers or trade outlets to
see try, and/or purchase the product.
LET US REMEMBER:
Promotion refers to the mode of conveying the presence and attributes of the product
to the target consumers. The business communicates to the target consumers the
pertinent information about the product including its benefits, price, and position in
the market. It creates awareness of the product in the minds of consumers and elicits
their desire to buy it.
LET US APPLY WHAT YOU HAVE LEARNED
Select a widely available product that you believe is not doing so well in the market.
Your objective is to revive interest in the product, all while maximizing exposure and
minimizing cost. Which tri-media vehicle will you choose (select only one) and why?
Create a mock-up of your message, and explain what reactions (communication
objectives) you want to elicit from your audience.
Rubrics:
Criteria
Details
Total Your
Points Points
Media Selection rationale How appropriate is the selected
medium?
Communication
How strategic are the communication
objectives
objectives?
Audience engagement
How engaging is the message?
Total
20
20
10
50
HOW MUCH HAVE YOU LEARNED FROM THIS MODULE? POST TEST
Identify a popular TV program that airs on primetime. Describe what its target market
is likely to be and what products are therefore a fit for this program.
Program:
Possible target market/s:
Fit for the following products:
REFERENCES:
AB Ilano, Principles of Marketing, Rex Book Store
Real C. So & Oscar G. Torres, Principles of Marketing, Vibal Group
Principles of Marketing
Quarter 4 – Week 7-9:
Workshop and Preparation of Marketing Plan
Lesson Integrate the marketing concepts
and techniques learned by
2
preparing a marketing plan
ABM_PM11-11g-J-24; present a
mini-marketing plan, orally and
in writing ABM_pm11-11g-j-25
m
Whats In…….
A marketing plan is a comprehensive document or blueprint that outlines a company’s
advertising and marketing efforts for the coming year. It describes business activities
involved in accomplishing specific marketing objectives within a set time frame. The
purpose of marketing plan is to clearly show what steps or actions will be taken to
achieve the plan goals.
What I need to know
At the end of this module, you are expected to be:
1. Integrate the marketing concepts and techniques learned by
preparing a marketing plan.
2. Present a mini-marketing plan orally
What’s New…
Instructions: Enumerate the factors for the following marketing analysis and briefly
describe each.
Micro-environment
Macro-environment
A. ___________________________
A. ___________________________
B.
C.
D.
E.
F.
_
___________________________
_
___________________________
_
___________________________
_
___________________________
_
___________________________
_
B.
C.
D.
E.
F.
_
___________________________
_
___________________________
_
___________________________
_
___________________________
_
___________________________
_
1. What is your greatest goal in life?
_________________________________________________________________
_____
_________________________________________________________________
_____
_________________________________________________________________
_____
_________________________________________________________________
_____
2. How can you achieve your goal?
_________________________________________________________________
_____
_________________________________________________________________
_____
_________________________________________________________________
_____
_________________________________________________________________
_____
3. Do you think it is possible for you to achieve such goal? In what ways?
_________________________________________________________________
_____
_________________________________________________________________
_____
_________________________________________________________________
_____
_________________________________________________________________
_____
What is it….
At this point, you are now ready to combine and integrate all the
knowledge and learning you have acquired on the basic principles of
marketing. There is no way better for you to demonstrate this than through the
preparation of a mini-marketing plan.
Below is a brief outline of a mini-marketing plan:
I.
II.
Executive summary
Study Background
a. Brief history of the company
b. Mission and Vision
c. Product/service offerings
III. Macro-environmental analysis
a. Economic
b. Politico-legal
c. Socio-cultural
d. Demographic
e. Technological
f. Natural
IV. Opportunities and Threats
V. Micro-environmental Analysis
a. The company
b. Suppliers
c. Marketing Intermediaries
d. Customers
e. Competition
f. Publics
VI. Strengths and Weaknesses
VII. The Market
a. Market size
b. Market needs
c. Market trends
VIII. Marketing Objectives
IX. Marketing strategiesn
A. Product/service strategy
1. Target Market
2. Brand positioning
B. Pricing strategy
C. Distribution strategy
D. Advertising and promotions strategy
X. Tactical Implementation
XI. Marketing Budget
XII. Feedback and Control
XIII. Financial projections
I.
Let us now proceed to complete each part of the plan:
Executive summary
The executive summary presents, in a very concise manner, vital
information contained in the marketing plan such as its marketing
objectives, strategy recommendations, marketing budget, projected
sales, and profitability. A well-written executive summary is usually
no longer than one or two pages. Because it is a summary of the
significant points and figures contained in the marketing plan, the
executive summary can only be composed after the marketing plan
is completed.
II.
Study Background
A. Brief history of the company
As the starting point for your paper, select a product brand.
Identify its manufacturer and write a brief history of this company.
Most companies’ historical background can be found in the
internet. Whenever you use material from the Internet, always
cite your source.
B. Mission and vision
Research on the company’s mission and vision through the
internet. These statements ca give you a vital information on its
business philosophy and long-term directions.
C. Product/service offerings
List down the company’s current product offerings, classifying
them by type (hair care, personal care, home care, etc) and also
indicate their suggested retail prices (SRP). This product listing
can determine the specific role your selected product brand plays
in the company’s entire product offering or product portfolio.
III. Macro-environmental analysis
Make
an
assessment
on
each
of
the
company’s
macro-environments. Get the latest data possible. A marketing plan
of a particular product is a plan of action for the future and is
intended to be implemented in the coming year. It is therefore
important that after accessing current information, secure also
authoritative information on how figures may look like in the
following year. Since the marketing plan is to be implemented a year
after, it is the following year’s macro-economic environment that the
product will have to contend with. Future indicators are readily
available on the internet.
A. Economic
Latest economic data is projected. Inflation rate and peso-dollar
exchange rates are usually critical in determining future cost,
price, and consumer purchasing power. Gross Domestic Product
(GDP) can indicate the general business environment in the
coming year. These data are available at the Bangko Sentral ng
Pilipinas website (www.bsp.gov.ph). Make sure only relevant
economic data are used. Economic factors should be concisely
stated and the accompanied figures and projections acquired
should also be indicated.
B. Politico-legal
The political macro-environment is assessed. Unless there is
obvious political stability, there is no need to project the political
environment. An exception would be a national election, which
may cause the economic and business climate to change
dramatically. Bills currently pending on the senate or in congress
that maybe enacted into law in the coming year should be
considered.
C. Socio-cultural
Identify relevant socio-cultural factors that may affect the manner
of how the selected brand will be marketed. There may, however,
be no possible change In the coming years because
socio-cultural factors take years, if not generation, to change.
D. Demographic
Based on target market, cite current and relevant figures that
may affect the marketability of the product. Therefore, if and
target market is “female residents of Metro Manila between the
ages of 18 and 25, who are career oriented,” determine the
population of Metro Manila, the gender mix f population, and the
distribution of the population by age are all relevant to your
brands marketability. As discussed in chapter 3, although
psychographic segmentation (“who are career oriented”) is
important in determining consumer behavior, there is little to n
Philippine population psychographic information available on the
internet. Because it takes many years before demographic
trends to change substantially, there is no need to project
demographic data acquired.
E. Technological
Depending on the industry relevant technological developments
that may favorably or unfavorably affect the chosen brand. This
may include, for example, a new production process which the
company can adopt to reduce manufacturing cost, or an
innovative type of packaging, the patent of which may be owned
by one of the competitors.
F. Natural
A thorough analysis of the natural macro-environment is
undertaken in this section: pollution, global warning and acts of
God, among others. There’s no need to project this into the
marketing plan’s implementation phase, however, because this
issues are not volatile over the short term period
IV. Opportunities and Threats
Enumerate identified opportunities and threats from the
macro-environment analysis. Arrange them chronologically. Relate
them directly to a specific macro-environmental factor and justify
why they classified as opportunities or threats.
V. Micro-environmental analysis
The six micro-environmental factors assessed and evaluated.
Because the micro-environment is not expected to change
dramatically over the short-term, it is largely unnecessary to project
the situation to the following year. The only aspect which may
situationally require projection is the competitive situation. It may be
possible that there is public knowledge of the entry of new
competitor that may affect the industry’s competitive landscape.
A. The company
The company is evaluated in terms of its organizational ability to
implement marketing strategies. The relationship among
functional areas must be evaluated to determine if there are
bottlenecks in decision-making, and if other functional
departments are supportive of the marketing. It would also be
helpful to look at the latest company income statement to
evaluate the company’s cost structure. Financial statements are
available from the Securities and Exchange Commission.
B. Supplier
In this section, the relationship between the company and its
suppliers is assessed. This is especially for suppliers involved in
the supply of raw materials vital to product manufacturing. Any
opportunities to improve the company’s supply chain should also
be investigated with the objective of reducing the product cost
and increasing value to the customers.
C. Marketing intermediaries
The company’s distribution network is illustrated and explained in
this section. The choice of distribution type is reviewed and
possible improvements in intermediary relationships is
determined.
D. Customers
In this section of the marketing plan, identification of the
geographic, demographic and psychographic profile of the
brand’s typical customer is expected. The buying behavior
should be explained and understood, e.g. why they buy, where
they buy, how frequently they buy, and how they use your
product.
E. Competition
This is where the brand competitors and the companies that
manufacture them are identified. If necessary, draw a perceptual
map to identify the closest competitors. Identify also the relative
positions of the different competing brands (including your own)
in terms of market share.
In this case high organized industries, information is available
from Euromonitor (www.euromonitor.com/philippines). Otherwise,
interview with product retailers can be used and shelf checks
conducted (normally the larger the shelf space a particular brand
occupies, the larger its sales). It would also be important to
discuss the recent competitive actions of the competitors in order
to anticipate how they will most likely respond to the proposed
marketing strategies.
F. Publics
Evaluate the company’s relationship with its publics; corporate
stockholders, the community, financial institutions, media, the
government, and society as a whole. This can prevent any future
need for the company to engage in public relations and publicity.
VI. Strengths and Weaknesses
Enumerate the identified strength and weaknesses from the
micro-environmental analysis. Arrange them chronologically. Relate
them directly to a specific micro-environmental factor and justify why
they are classified as strength and weaknesses.
VII. The market
A. Market size
Show the size of your market. The total market is the sum total of
the group f individual or organizational consumers who have both
the willingness and financial capability to purchase a particular
product or service. Some industries have their total market size
published in Euromonitor. If you can identify your industry
competitors, simply add the total sales of all different brands to
arrive at the market size. If this information is not available, you
may need to conduct interviews or surveys to determine
purchase size, frequency of purchase, and average price paid.
When this is combined with the market population data you will
arrive at market size. Market size is expressed either in units or
in value (pesos).
B. Market needs
Know your market intimately to be able to serve its needs.
Understand and express what exactly the market is looking for in
the product that you are offering. Describe the market needs and
wants and its value perceptions of various product/service
attributes.
C. Market trends
Based on the historical trend, the segment or t=sub-segment’s
growth rate is projected over the plan period. Trends are also
identified with the respect to market needs and preferences.
VIII. Marketing objectives
In this section state the marketing objectives. Arrange the objectives
in sequence. Marketing objectives may include brand awareness
target and sales revenue objectives. They must be specific,
measurable, attainable, realistic and time-bounded. An example of
marketing objective pertaining to brand awareness is as follows:
“To attain a brand awareness level of 65 % by December 31, 2020
IX. Marketing strategies
In this chapter, marketing strategies are proposed based n a
thorough analysis of opportunities and threats, strengths and
weaknesses, and the market for the proposed product/service.
Strategies must collectively be able to achieve all marketing
objectives.
A. Product/Service
Product or service should be fully explained. Indicate any
innovations you plan to implement in your product or service; e.g.
a change in packaging label, supplements on your service
offering, etc. Identify the value proposition or unique selling
proposition of the product/service.
B. Target Market
Describe in detail the target market of the product/service. Use
as many or a few segmentation variables as necessary to outline
the
target
market’s
geographic,
demographic,
and
psychographic profile. Quantify the size of your target market. If
you plan to expand, contract, or totally change your brands
present target markets, indicate the changes and justify it
convincingly.
C. Brand positioning
State the current positioning of the brand/service. Fully explain if
you think it is relevant for use. If revision is needed, state the
proposed alternative brand positioning. Fully justify the proposed
brand positioning and explain convincingly why it is more
appropriate than the current one. Remember that positioning of
your proposed product/service must be unique, beneficial and
credible, and must revolve around a product or a service attribute
that is relevant to your target market.
D. Pricing strategy
Based on the marketing objective formulated, decide on a
general pricing strategy for the brand. It is possible to implement
general pricing strategies for a brand during an operating year.
For example, a brand may have a general strategy of
going-rate-pricing but implement promotional pricing during the
last quarter of the year.
E. Distribution Strategy
Review the brands current distribution strategy to determine if it
is still applicable for the marketing plan’s implementing period.
When adjustments or modification are required, give
recommendations as to how the selected brand can be
distributed more efficiently.
D. Advertising and promotional strategy
In this section, propose your advertising and promotion strategy.
Based on the advertising and promotional objectives and target
audience profile, decide on the message, creative style, vehicles,
media you will utilize. Provide details of media and promotional
plan, including locations for advertising placements, their
frequency and approximate cost. Also indicate the mechanics of
the trade and consumer promotions. If any, their corresponding
costs. Select media carefully, giving consideration on cost
effectiveness.
X.
Tactical implementation
Develop tactics for each strategy. Some strategies may only require
a little a two tactical plan, while others may need to be supported by
five or more tactics. In essence, there is no precise number of tactics
per strategy. There should be as many tactics as necessary to
ensure the success of the strategy, but no additional tactics may be
proposed if it does not contribute to successful strategy
implementation.
Write a brief discussion of the operating details of each tactic
including the timetable as to when each will be implemented.
An example of this is provided below:
Marketing strategy: Market development
Tactics
Operating details
Establish
a To
accommodate
warehouse in cebu
store merchandise to
support Cebu retail
operations
Hire and train Cebu Hiring
must
be
store personnel
localized
and
extensive
training
undertaken
to
maximize customer
service
Open a retail outlet This is to take
in cebu
advantage of the
growing market in the
Vizayas
Time table
September 2020
September 2020
October 2020
IX. Marketing Budget
In this chapter, indicate the total cost involved in the implementation
of the proposed marketing plan. Only third party expenditures are to
be included in the marketing budget. Capital expenditures like retail
outlet construction expenses and the purchase of packaging,
machinery, are excluded from the marketing budget.
An example below:
Marketing Budget 2020
Advertising expenses, which include the ff:
Television
Radio
Newspaper
Leaflets
Point-of-purchase materials
Sales promotions
Total
000.00
P10, 600, 000.00
7, 500, 000.00
1, 870, 000.00
1, 230, 000.00
25, 000.00
220, 000.00
650, 000.00
11, 495,
XI. Feedback and Control
The purpose of this section is to ensure that each of the tactics is
carried out as planned. There should be feedback and control write
up for each of your tactics. In paragraph for discuss individual tactic
benchmark or milestone to indicate that the tactics is implemented
according to plan. Corrective measures that can be taken to ensure
adherence to plan must be developed; e.g. reporting procedures
and forms, coordination among parties and accountabilities.
An example is shown below:
Action plan: Hire and train Cebu store personnel
2020
Timetable: September
By the end of August 2020, personnel required for all position in the Cebu
store should already have been screened and prequalified. If this deadline will
not be met, the company should contact a local employment office to fill in
missing positions. At the latest, this should be completed by September 10.
Training should commence immediately on September 12 to be completed by
September 28. At this point, the company should subject all who have
completed the necessary training to standard performance appraisal to
determine which trainees will be hired. By September 30, the trainee should be
informed of their hiring status. If there are no qualified trainees for specific
critical positions such as Assistant Store Manager and Store Inventory
Supervisor, qualified employees from Manila stores shall be flown in to
temporarily occupy these positions. Continuous recruitment, prequalify cation
and training for unfilled Cebu store positions shall continue by October 2020,
however all vacant position should be filled.
XII. Financial projections
At the point, present the financial viability of your proposed
marketing plan.
The latest available incoming statement of your company can be
used. Begin by calculating the expected revenues to be generated
by your marketing plan. Add the expected amount of your average
historical sales of the company. The sum is the total sales generated
for the year. Using the same percentage of costs of sales from the
latest available income statement, deduct the percentage amount of
the total sales to obtain the gross profit. The difference is the income
before tax. Deduct income tax (currently at 30 % of income for
corporations) from the gross income.
The resulting amount is your income after tax. (net income).
If latest income statement is not available, you can prepare
projected income statement using the incremental method. Simply
calculate the additional incremental sales the brand can realise as a
result of the proposed marketing plan.Use a close competitors
historical income statement to determine percentage cost of sales.
Because the competitor manufactures a similar product, its costs
should be similar to yours. Apply this percentage to your incremental
brand sales and deduct this amount from your incremental brand
sales to arrive at incremental gross profit. Deduct your marketing
budget from your incremental gross profit to determine your
incremental income before income tax. Deduct incremental income
tax at 30% of income before income tax for corporations to arrive on
you incremental income after income tax.
Whats more…..
1. Complete the mini marketing outline and briefly describe each
I.
______________________
II. Study background
a. Brief history of the company
b. ______________________
c. Products service offerings
III. Macro environmental analysis
a. Economic
b. Politico-legal
c. _______________________
d. Demographic
e. Technological
f. Natural
IV. ________________________
V. Micro-environmental analysis
a. The company
b. Suppliers
c. Marketing intermediaries
d. ___________________________
e. Competition
f. Publics
VI. ______________________________
VII. The market
a. Market size
b. Market needs
c. Market trends
VIII. Marketing objectives
IX. ___________________________________
a. Product/service strategy
1. Target market
2. _______________
b. Pricing strategy
c. Distribution strategy
d. Advertising and promotion strategy
X. Tactical implementation
XI. _____________________________________
XII. Feedback and control
XIII. _____________________________________
What I have learned….
Mini-marketing plan presentation
You are required to submit a mini-marketing plan based on the format given above. The mini
marketing plan will be graded based on the rubrics presented below:
Criteria
Introduction
Company
analysis
Market
definition,
Potential,
Demand
Level of achievment
Excellent
Satisfactory
(3 points)
(2 pts)
The introduction
The intrductin is
clearly and cosisely
somewhat unclear
introduces the
and/or not concise in
purpose of the
stating the purpose of
marketing plan
the marketing plan
Information about Information about the
the company or
company or
organization is
organization is, for the
thoroughly and
most part, thoroughly
clearly reported,
and clearly reported.
inclui=ding such
But some information
things as the type of that may be critical to
product or service,
the marketing plan is
employees company
missing
history, previous
and current
marketing efforts,
current knowledge
of customer and
cometitors etc.
A visual depiction
Either the visual
and verbal
depiction or verbal
description of the
description of the
market definition is
market definition is
provided that is
missing. Both maybe
reasonable and
provided but not clear
based on the
or reasonable. One of
company or
the
organization.
estimates/calculations
Reasonable
for market potential,
Unacceptable
(1 pt)
There is no introduction
that states the purpose of
the marketing plan
Company or organization
is provided but there is a
great deal of potential
important information
missing.
There is no visual
depiction of the market
definition. More than one
estimate/calculation of
arket potential, market
demand and company
demand are missing or
clearly miscalculated.
estimates or
market demand and
calculations of
company demand are
market potential,
missing or clearly
market demand and
miscalculated.
company demand
are provided and
clearly stated.
SWOT Analysis
A thorough SWot
SWOT analysis is
SWOT analysis is provided
analysis is provided,
provided, but there
but there are more than
based on preceding
are some missing
six missing points from
analysis. Reasoning points from preceding preceding analysis. There
for each item in the
analysis. Reasoning
is no reasonable points
SWOT is provided
for each item is not
provided for the items.
and logical.
always thoroughly
More than two
Strengths and
provided and/or
strengths/weaknesses or
weaknesses are
logical. One or two
opportunities/threats are
clearly internal
strengths/weaknesses
inappropriate.
factors, while
are external, or
opportunities and
one/two
threats are clearly
opportunities/threats
external factor
are internal
Marketing
The marketing
Linkage of marketing
Marketing goals and
objectives and objectives and goals
objectives and goals
objectives are missing or
goals
are clearly related to
to
those that are identified
the
company/organization are not quantified or are
company/organizati mission is not clearly
inappropriate
on mission.
stated. Some of the
Objectives and goals
objectives and goal
are clearly stated
are unclear and/or not
and appropriately
appropriately
quantified.
quantified.
Marketing
The marketing
Marketing strategy is The marketing strategy is
Strategy
direction that will
identified but is
missing or is illogical given
frame marketing
unclear or unspecific
the marketing objectives
tactics of the
in some aspects. The
and goals.
marketing plan is
marketing strategy is
clearly and
logically linked to the
specifically stated in marketing objectives
3-5 sentences. The
and goals
marketing strategy
is logically link to
the marketing
objectives.
Implementation
A thorough and
An implementation
An implementation plan is
and control
specific
plan is identified, but identified, but more than
implementation
one to two tactics are
two tactics are not
plan is clearly
not addressed.
addressed, and the plan
Conclusion
Writing styles
Grammar
spelling and
formatting
Criteria points
Introduction
Company
analysis
Market
identified for every
Specifically of some
tactic; the plan
components of the
identifies who is
plan could be
responsible for
improved. The
implementing the
company will be able
tactic, when it
to use the plan to
should be
implement the
implemented, the
marketing plan, but
cost measurement
maybe confused
of effectiveness, and about some aspects
any other relevant
because of missing
information
information
A brief summary
A summary of
that identifies the
expected outcome is
expected outcomes
provided but lacks
with successful
clarity.
implementation of
the marketing plan
is clearly presented
in short paragraph
The plan has writing
The writing styles
style that is uniform
lacks uniformity at
throughout the
times and is not
paper and
always appropriate for
appropriate for this
a marketing plan.
type of written
There is some
project. There is no indication of multiple
indication that the
authors (different
paper involved
fonts, different paper
multiple authors.
etc)
The plan has been
There are few spelling
thoroughly spell
and/or grammatical
checked and
errors. There are one
proofread. There
to three grammatical
are no to almost
errors.
none grammatical
errors. There are no
formatting errors
Points
generally lacks specificity.
Because of missing
information, the plan will
not help the
company/organization
implement the marketing
plan
There is no conclusion.
The plan is clearly the
works of multiple authors
with different writing
styles, margins, printer
fonts, paper types
There are frequent
misspelled words, serious
grammatical errors, and
formatting errors,
indicating that time was
not taken to spell-check
and proofread.
Grade equivalent (30 pts=100%)
Points earned
25-30
19-24
%
94-100
88-93
Description
Outstanding
Exemplary
definition,
potential and
demand
SWOT analysis
Marketing
objectives and
goals
Marketing
strategy
Implementation
and control
Conclusion
Writing styles
Gramar Spelling
and formatting
13-18
7-12
proficient
1-6
82-87
76-81
Proficient
Partially
70-75
Incomplete